Despite a rocky year in 2023, entertainment stocks are expected to rebound in 2024, as the tides are turning. Streaming and gaming services should recover, boosted by increased advertisement support and streaming bundles, analysts believe. Emerging markets, such as Indonesia, will also bring growth.
According to Deloitte, the “combined number of subscription video on demand tiers offered by the top US providers will more than double between 2022 and 2024, from an average of four to eight.”
At the same time, streaming services, such as Netflix, Amazon Prime, Hulu, HBO Max, etc., are expected to shift from growth at all costs to making it easier for all their subscribers to get value for the price, by offering cheaper ad-supported offerings, like Netflix already did, and gated content to premium tiers with instant access.
So, let’s take a closer look at some of the majors: The Walt Disney Company, Netflix, Comcast and Spotify.
The Walt Disney Company
The Walt Disney Company fell 9.06% in the past year to $93.8 mainly due to being involved in various lawsuits.
Its streaming business, Disney+ is facing the stiff competition of Netflix, Amazon Prime, Universal and Apple, among others, while the company is being accused of losing originality and relying on rehashing old favourites and sequels, some of which are not very successful.
In 2024, the company expects to focus heavily on its Experiences business – theme parks, boost the sports platforms ESPN and continue its investments in the streaming business.
Netflix surged 53.4% over the last year. The streaming service saw an increase of almost 30 million subscribers in 2023, clocking in at almost 260 million global subscribers by the end of the year. This was mainly due to introducing the ad-supported cheaper subscription plans, taking actions against password sharing, and introducing content tiers, thus raising the subscription fees for its ad-free plans.
“When Netflix reported in Q3, there was some doubt as to whether it would be able to compete with its deeper pocketed peers, as well as whether its new ad-supported tier would cannibalise its revenue base as users traded down to a cheaper package,” Michael Hewson, chief market analyst at CMC Markets told Euronews Business. “Fears that the crackdown on password sharing would prompt a slowdown in subscriber numbers have thus far proved unfounded, with the shares up over 20% to 2-year highs, since those Q3 numbers were released,” he added.
The big challenges ahead of Netflix in 2024 are maintaining the 2023 momentum and advancing in the gaming industry. But Netflix is well ahead of most of its competition with its wide selection of original content and distribution.
Shares in Comcast Corporation, the owner of NBCUniversal and Peacock, climbed 9.72% to $43.6 in 2023, mainly thanks to growing subscriber numbers and strong broadband sales, as well as the recovery of entertainment parks and the movie business. But the company faced some issues, too: less home office work meant broadband subscriptions being cut.
This year, Comcast plans to continue investing heavily in its streaming business, Xfinity Stream, theme parks and wireless services.
Spotify rose a remarkable 114.26% to $212.2 over the past year, mainly thanks to rising premium subscribers’ and active users numbers. On the other hand, the company managed to reduce operating costs and raise both subscription fees and ad-supported revenue. Podcasts also contributed.
For this year, Spotify is planning to launch in-app purchases of, for example, audiobooks. It has been in the plans for a while, but Apple’s restrictions and high commissions have been a major hurdle. With the coming into force of the Digital Markets Act in the European Union from 7 March, this is expected to change, at least for residents of the EU.
Whether all these plans and forecasts will come into fruition, only time can tell, but it appears that the entertainment industry will be on the rise in 2024.
This article is for information purposes only. It does not post a buy or sell recommendation for any of the financial instruments herein analysed.
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