Broadcast is dying. Streaming is the future. Let's pick up where I left off on this topic as it's not too late to get on the right side of both trends.
I still vividly remember how nobody even understood what I was talking about when I asked them if they were looking forward to the day when they would be able to stream any show at any time from anywhere back in 2006 when I did a Cody Cam segment on the future of video for Kudlow & Company on CNBC. I later explained to Carl Quintanilla that the cable and satellite companies were going to eventually be in big trouble because being able to stream even live TV events was a more efficient way for users to get much lower prices than you get with a traditional TV cable/satellite contract.
Well, with the wild success that Netflix (NFLX) is continuing to have and more recently the relative success of Yahoo! (YHOO) live-streaming last Sunday's Jaguars vs. Bills NFL game in London around the world, everybody finally gets it. But it's still very early in this media world tectonic plate shifting. The impact that streaming has had so far on broadcast TV is minimal. Streaming vs. broadcast is in the first inning, about equivalent to the limited but soon to be outsized impact that the Internet had on newspapers back 15 years ago when everybody realized that the Internet would forever revolutionize the newspaper business.
Cable at least has the upside of being a broadband pipe to the home and business. That said, cable broadband technology, with its expensive trenching and wiring costs, will lose to wireless over the long term. Wireless is going to the dominant means of broadband connectivity in future decades, too. Distribution costs via streaming over a broadband pipe you're already paying a set monthly fee for, whether via wireless or cable or DSL/Wi-Fi, are going to zero vs. paying $100-$200 a month in cable and satellite bills. We've talking about a slow-motion movement that will pick up steam in small part due to the surprising success of the Yahoo! NFL live stream last weekend.
About that Yahoo NFL game, let's dig into some numbers and get a reality check. First, let's pop the hyped numbers: 33.6 million streams and 15.2 million unique viewers for a total of 460 million total minutes of football. The problem with those numbers is that they include anybody who went to any of Yahoo!'s sites including Tumblr(!) while the game was on. Imagine how big those numbers would be if Google (GOOGL) were to do that with Google.com, YouTube and their other properties? Google isn't Yahoo! and isn't about to do that, but the numbers would be 100 times larger and underscore how meaningless such an accidental audience metric is.
Yahoo! doing the forced live stream on Tumblr reminds me a bit of when Apple did that same kind of thing with spamming my Apple Music account with that crappy album from U2 a couple of years ago. I still get annoyed when one of those songs comes up on my shuffle and it's an actual reason that I still prefer Spotify to Apple's new music app. But I digress.
CNN Money, using slightly different math, puts the average viewership per minute at 2.36 million, which includes about 1.5 million people in the U.S. When you realize that televised NFL games average between 10 million and 20 million viewers per minute, you can see the upside potential for secular growth of live streaming for the NFL. And realize how quickly the numbers are already growing -- Yahoo!'s NFL stream averaged safely 2 million while last season's Super Bowl peaked with 1.3 million.
What if Netflix gets into streaming live sporting events? ESPN is at least leveraging this new trend and allowing users of its Watch ESPN app to stream live events already. I also use Dish's (DISH) Sling service to stream games including the NFL RedZone channel on my iPad or iPhone when I'm on the go, but its quality of signal is lacking. Believe it or not, back in early 2007, I actually also used Sling to show myself being streamed live on CNBC back on Kudlow & Company, too, using it as an example of the future.
Winners of the streaming wars? NFLX, obviously. Also platform providers Apple (AAPL), Google, Amazon (AMZN). Speaking of distribution, it might be time to take a look at Akamai (AKAM), which is getting slammed after a disappointing earnings report last night. I already own each of those companies, as you can see in my Latest Positions. Losers include satellite and broadcast TV companies, which has me digging into the potential of shorting AT&T (T), though the nearly 6% yield there has me sidelined for now. (Google and Apple are part of TheStreet's Action Alerts PLUS portfolio. Amazon is part of the Growth Seeker portfolio. AT&T is part of the Dividend Stock Advisor portfolio.)