Revenue in the video on demand space is expected to reach $80.83bn in 2022, according to Statista, before a compound annual growth rate of more than 11% pushes annual revenues up to $139bn by 2027. But which companies are well placed to take advantage of this rapidly growing segment? This article will cover the matter with reference to Netflix (NASDAQ: NFLX), Apple (NASDAQ: AAPL), The Walt Disney Co (NYSE: DIS) and QYOU Media (TSX: QYOU) (OTCQB: QYOUF).
QYOU Media (TSX: QYOU) (OTCQB: QYOUF) operates as a media company. It produces and distributes content created by social media influencers, artists, and digital content creators on television networks, satellite television, over-the-top media and mobile platforms.
QYOU Media manages influencer marketing campaigns for major film studios and key household brands.
Its most recent earnings, which covered the three-month period ended 31 March, showed revenue grew by an astronomical 2,410% against the same period 12 months prior.
The company’s primary focus is India, where it is targeting the over 750 million people who make up the under 35 demographic. The business’ Q India brand has four channels which are spread across TV broadcast and video on demand.
With smartphone and smart TV use in India growing, the company’s channels are accessible to over 680 million viewers via over-the-top, mobile and app-based platforms.
The channels have found success so far, with The Q’s flagship Hindi language channel being viewed by 113 million people per week, according to stats released in April. More is on the way too, with a new channel dedicated to videogames set for launch in September.
QYOU Media’s production model involves creating high-quality shows quickly and cheaply by partnering with the most popular Indian social media influencers and using their pre-existing video content.
It’s a concept which has led to advertising contracts with household names such as Coca Cola, Unilever, Google and Nestle.
Netflix (NASDAQ: NFLX), which was co-founded by Reed Hastings in 1997, operates as a subscription streaming service and production company. The company offers a wide variety of TV shows, movies, anime and documentaries on internet-connected devices.
The streaming service’s most recent earnings showed an 8.6% increase in revenue to $7.97bn and a 5.5% increase in subscriber numbers compared to the same point in 2021.
The update beat expectations but Netflix still lost subscribers across the three-month period, though its user base has increased over the last 12 months. Additionally, there are concerns that a new ad-supported offering may not be enough to turn the business’ fortunes around.
Netflix says it wants this new subscription form to offer consumers more choice while also creating a premium and better-than-linear TV brand experience for advertisers.
The new package is set to launch in the early months of 2023, kicking off in markets where advertising spend is most attractive. This is an important factor, as social media and tech companies have widely reported being hit by a reduction in advertising spend this year as economic turmoil spreads across the globe.
However, the move still opens a new revenue stream for the business and, with a return to subscriber growth expected in the third quarter, the future could still be bright for the streaming giant.
Led by Tim Cook, Apple (NASDAQ: AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related accessories. The Company also offers payment, digital content, cloud and advertising services. Its customers are primarily in consumer, small & mid-sized business, education, enterprise and government markets worldwide.
The business’ most recent earnings saw it report record quarterly revenues of $83.0bn, which constituted year-on-year growth of 2%.
The company has become a major player in the streaming world courtesy of its Apple TV offering.
While the business appeared to initially face a tough task due to strong competition, its in-house produced shows and movies have been well-received by critics and audiences alike. Indeed, its shows received a record breaking 52 Emmy Award nominations in July, with sports comedy series Ted Lasso and science fiction thriller Severance leading the pack.
While the company doesn’t provide a specific breakdown of revenue or subscriber data from its streaming service, its services segment provided $19.6bn in the third quarter. Statista estimates that the number of subscribers sat at 75 million in March 2022.
Considering the number of subscribers is almost three times higher at its largest competitor, there is still plenty of room for growth. Additionally, Apple appears to be exploring further advertising opportunities, indicating that its streaming service could soon be available in ad-supported form.
The Walt Disney Co (NYSE: DIS), which is helmed by Bob Chapek, operates as an entertainment and media enterprise company. The company's business segments include media networks, parks and resorts, studio entertainment, consumer products and interactive media.
The business’ last earnings update saw quarterly revenue increase by 26% compared to the same period in 2021, coming in at $21.50bn.
The company has long been a giant of the entertainment industry, but 2019 saw the business throw its heft into the video on demand space with the launch of Disney Plus.
The last quarter saw The Walt Disney Co add 14.4 million subscribers to its streaming services, leaving it with a total of 221 million.
However, despite this seemingly strong growth, the business intends to launch an ad-supported version of its Plus service in late 2022. This service, which is part of a new slate of subscription plans across its various platforms, will initially be available to viewers in the US, before expanding internationally in early 2023.
The company already has experience with ad-supported video on demand services, with its Hulu and ESPN+ offerings long having used advertising.
This experience might give The Walt Disney Co the edge on other streaming outfits who are launching their own ad-supported offerings, allowing the business to avoid pitfalls and build on existing relationships.