Newspapers… brick-and-mortar retailers like Sears Holding Corp. (Nasdaq: SHLD)… travel agents… music stores.
All industries decimated by the Internet.
That’s largely because of the lack of live TV offerings, especially news and sports. Just try to imagine life without FOX News or ESPN. Comcast Corp. (Nasdaq: CMCSA) is coming off several years of very strong growth.
However, that’s changing rapidly.
Really rapidly.
In fact, a new statistic I just saw tells me that cable will soon be as dead as the morning newspaper – and much faster than anyone expected.
Today I’ll show you that stat.
And we’ll look at a great way to play the growth in online streaming.
It’ll put you on the road to wealth – fast.
Check it out…
Live… from Silicon Valley
I’m a free man myself.
My wife and I have been loyal Comcast customers for more than 20 years. In fact, I still use the company for our high-speed Internet connection and have no intention of switching.
But our television is an entirely different matter. We just got tired of paying for what seemed like hundreds of channels we never watched and switched to a streaming service.
We’re far from alone.
Indeed, Comcast’s stock is in a downtrend after recently saying it expects to lose as many as 150,000 viewers in the current quarter.
In other words, we are at a tipping point in which the death of cable TV is upon us.
And streaming live television – sports and news – is the reason.
In recent months, services like Sling TV have come on strong. Sling offers live shows from ABC, CNBC, CNN, ESPN, and FOX, to name a few.
Cynics point out that we may end up paying more over the long haul for streaming content. But surveys show that consumers prefer to pay for what they are actually using – instead of paying for hundreds of channels they barely know exist.
Here’s proof…
A new report by eMarketer says that by the end of 2017, a total of 22.2 million U.S. adults will have cut the cord on cable, satellite, and telco pay TV. That’s a 33% increase from the 16.7 million cord cutters in 2016.
That’s way ahead of schedule. The research firm had predicted that only 15.4 million users would ditch pay TV last year.
That’s a death spiral.
The long-run picture for online streaming looks even brighter. Fact is, millions of young adults – including my two college-age daughters – haven’t watched pay TV in years. Then there are the millions of children who have never watched cable, except maybe at their grandparents’ house.
By 2021, eMarketer says, the number of cord cutters will nearly equal those who have never had pay TV, an astounding 81 million U.S. adults. By then, roughly 30% of American adults will be streaming their content, including live TV.
This is bad news for cable companies like Comcast.
But it’s great news for savvy tech investors like you…
The Great Disruptor
This year’s Emmy Awards shows just how important online streaming has become. Consider that one streaming leader in particular had some 91 shows and movies it produced up for awards.
We’re talking about 91 shows and movies produced by Netflix Inc. (Nasdaq: NFLX). That’s up from 54 just one year ago.
Netflix is now the first choice for a slate of top-tier talent. Big names like Kevin Spacey, Adam Sandler, Sissy Spacek, Lily Tomlin, and Drew Barrymore have all anchored popular Netflix shows or movies. That’s all part of a content budget that now surpasses $6 billion each year.
Netflix makes a tough business look easy. It has spent hundreds of millions of dollars on local servers so you can stream high-definition video without any delays. Its service can be viewed on Blu-ray players, smartphones, set-top boxes like those made by Roku Inc. and Apple Inc. (Nasdaq: AAPL), and even on airplanes.
Netflix’s massive presence at the Emmys makes clear one simple point. It’s a vital content provider that deploys every trick of the trade to keep subscribers hooked, month after month.
The Rise of Netflix
Make no mistake. Netflix has been the most disruptive force in the viewing and streaming landscape today. It’s the result of 20 years of hard work.
Many home viewers first got an inkling that they could live without pay TV when Netflix began its DVD-by-mail service in 1998. Less than a decade later, it had already mailed out more than 1 billion DVDs.
The move to streaming soon emerged. And sometime in the next six to nine months, this service will surpass the DVD-by-mail option in terms of sales.
Netflix isn’t just an American success story. Half of its 104 million subscribers stream films and shows in other countries. In response, the firm has greatly boosted its roster of foreign-language films and shows.
With each passing quarter, Netflix proves its mettle and its shares surge higher. In the second quarter, it posted $2.79 billion in sales and, more important, added 4.14 million net new subscribers. That’s 60% better subscriber growth than analysts had predicted.
Since I first suggested it to Strategic Tech Investor readers in March 2014, Netflix is up 208.5%.
But that’s not the end of Netflix’s rise.
Here’s how I know…
A Growth Machine
Netflix thinks it will lure 4.4 million net new subscribers this quarter, also ahead of plan.
The lure here is hot new shows. For example, when Netflix aired a miniseries called “13 Reasons Why” in March, the “watercooler” buzz was so intense that the firm saw an instant spike in new subs.
Additionally, international subscribers are signing on at an especially rapid rate and already account for 75% of the firm’s subscriber base. That makes sense when you consider that the global market is far larger than the United States alone.
Analysts at Merrill Lynch believe Netflix could end up with 250 million global subscribers by the time it matures.
Here’s the amazing thing. Netflix has boosted yearly sales by an average of 25%. Despite a sales base that reached almost $9 billion last year, Netflix is poised to grow even faster this year.
Sales are projected to grow 30% this year, while profits should nearly triple. Shares of Netflix trade at $180, and the firm is valued at $77.29 billion.
As that statistic I shared with you proves, the already robust cord-cutting trend is picking up even more speed. That’s helping Netflix to further cement its iron grip on this unstoppable trend. The firm’s service is still an incredible bargain when compared to traditional cable packages.
That means Netflix can raise prices – and expand profit margins – and its customers won’t even think about switching back to pay TV.
The fact that this firm is now creating a growing volume of must-see programming each month makes its customer base that much stickier.
When Netflix finally figures out how to add sports and news to its lineup – well, that’ll be the final knife in cable’s back.
The road to wealth is paved by tech – even if it’s one technology killing another.
And you’ll still be able to count on this stock – and its tech – to keep you on that road to wealth for years to come.
— Michael Robinson
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Source: Money Morning