Streaming Services Hit a Crossroad

2020 was a great year for streaming service companies, as quarantined populations turned to binge watching shows old and new. With the economy reopening, however, more options are available to consumers, who want to get out of the house.

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  • That creates a challenge for streaming companies to keep their subscribers. For instance, in its latest earnings on Tuesday, Netflix (NFLX) reported lighter-than-expected subscriber growth, the key metric for streaming companies.

    However, Netflix is already working to develop gaming. While some feared this might cut into video game consoles, it appears that the streaming giant is working on mobile gaming, taking advantage of streaming services for customers on-the-go.

    While still in its early stages, it shows the company is aware of the current trends in streaming, and how to shift the market appropriately. And while user growth is slowing, the surge during the pandemic was so large that the company is hardly in dire straits.

    Action to take: Shares are off more than 10 percent from their all-time highs, but it’s likely that the company can continue to grow its revenue and profits, even if subscriber growth rates slow. Investors may expect a rebound in the coming weeks.

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    Disclosure: The author of this article has no position in the company mentioned here, but may make a trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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