09/17/2020

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Spending on Video Content May Have Hit Its Limit



Analysts Expect a Video Content Spending Decline


For the past three decades, consumer spending on video content has increased year-over-year. That said, a new report demonstrates how this trend could be coming to an end. More specifically, consumers may have reached a limit on the amount of money they’re willing to allocate from their paychecks to certain forms of video entertainment. This makes picking companies on either side of the cord-cutting cultural shift all the more interesting.

Cable services, theaters, and home video companies are all projected to experience dips. On the flipside, streaming platforms may steadily gain market share. Combined, however, as COVID-19 continues to impact the economy, overall spending on video content could decrease by 5% this year alone.

Taking a Look at the Trend


Analysts Michael Nathanson and Craig Moffett from Moffett Nathanson predict spending on video, cable, and satellite services to continue dropping for years to come. Despite seeing 2% annual growth from 2014 to 2019, the analysts estimate there could be a 0.4% per year decline in spending on these services for the next four years.

Although there is currently economic uncertainty due to coronavirus and shutdowns, analysts believe the decrease in spending is not necessarily because of current economic conditions but because of changes in technology. With the exception of live sports, which have currently been sidelined, legacy cable providers may continue to face headwinds in the form of weak advertising and continued cord-cutting even after the pandemic subsides.

Streaming Services Could Continue to Grow


Although other video content providers are taking a hit, total spending on subscription streaming services is expected to grow to $38 billion through 2024. Specifically, the market for virtual cable services such as AT&T Now (T) and YouTube TV (GOOGL) is expected to more than double, increasing from $6 billion in 2019 to $13 billion in four years.

Netflix (NFLX) in particular could be a company to watch. The streaming platform could reach 70 million subscribers by 2024. Amazon Prime (AMZN), Hulu, and Disney+ (DIS) are also expected to grow and to reach 65 million, 58 million, and 53 million subscribers, respectively.

Although coronavirus lockdowns caused more consumers to fill their time at home with video content, the industry may have reached a tipping point. Moreover, only certain segments of the hyper-competitive sector look set to outperform going forward. It will be crucial to assess a specific company’s offerings and business plan, especially as it relates to the future of the industry, before investing.


Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
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