The Internet Video Revolution and its internal world wars have been fomenting over the last decade or so and are exploding in 2015. There have been some big winners like Facebook (FB), Apple (AAPL), Google (GOOGL) and Netflix (NFLX), and lots of losers too, including the cable companies. The way we consume video is very different than how we did just five years ago, and where there's big change, there's opportunity for investors. Five years ago in Marketwatch I explained that:
"Do you think when we talk about watching Hollywood and other mainstream content on apps or on TV that we're talking about paying $100 or more a month for hundreds of channels broadcasting 24 hours of programming a day? Do you realize that even if you watched TV 12 hours a day, seven days a week, that you'd still only be consuming 84 hours out of the 33,600 hours of programming that you're paying for (200 channels x 24 hours a day x 7 days in a week)?"
Matter of fact, I was actually writing about this very same Internet Video Revolution and the winners vs. losers in these wars back 10 years ago in the Financial Times:
"Then there is the distribution side of the equation. Distributors who hit critical mass and remain agnostic on content have condemned traditional forms of distribution to secular decline. This means Google and Apple, but not Yahoo! (YHOO), which foolishly creates its own content to push on its users. All the cable networks, the newspapers, the cinemas and the radio stations have lost secular growth. All these models are dying."
Here's some updated analysis on the Video Internet Revolution:
First, the retailers -- Netflix is the one that comes to mind first, obviously, and it's still one of the best ways to invest in the App Revolution. But Amazon (AMZN), Google, Apple, Hulu and others are all trying to compete with Netflix's dominance as the de-facto standard for video streaming. I thought Netflix made a big mistake when it started spending millions on programming rather than just focusing on being a distribution outlet to the end-user consumer for all the video content libraries full of TV shows and movies that already exist. (Facebook, Apple and Google are part of TheStreet's Action Alerts PLUS portfolio. Amazon is part of the Growth Seeker portfolio.)
The most shocking thing about Netflix's content is that it's as good if not better than the very best TV broadcast programming you find on any network or cable channel. House of Cards was groundbreaking and the way Netflix released its first season all at once enabled its fans to satiate their appetite and become addicted in real time to the show. The wild success that House of Cards and the other Netflix shows have enjoyed, including being fully embraced by the award shows and immediately winning Emmys, has made Netflix not just an alternative to cable/satellite TV subscriptions, but something of an HBO-like production house full of must-see content.
Amazon's trying to follow in Netflix's footsteps by financing and creating its own TV shows, and has had some mainstream award show/Emmy success of its own. Amazon's got a lot of businesses to manage and it's a big hurdle for it to maintain a Netflix/HBO level of quality for its programming. It might be wise for Amazon to focus on acquiring rights, sometimes exclusive rights, to Hollywood content instead of trying to create its own. Apple TV, Google TV and even YouTube are nowhere near as dominant as Netflix and Amazon Prime in the Hollywood-level TV/movie streaming business.
Other winners in the Video Revolution wars include content library owners like Sony (SNE), which I first bought a year ago when it was in the mid-teens and still hold as play on this concept. Sony owns the rights to Seinfeld, Jeopardy, the Spider Man movies and so many other shows and movies it'd make your eyes spin.
And don't forget the facilitators of all this video streaming going on and the bandwidth intensity that comes with it. Akamai (AKAM) and Level 3 (LVLT) are two names that come to mind here.
You can't own them all, as they say, and I don't. But sometimes I think I should. To see which names I do own and why, please check out Trading With Cody. Investing in the Internet Video Revolution has been and will continue to be one of the most profitable ways in a secularly growing technology/video consumption revolution.
