It's been five months since my controversially misunderstood article -- "Apple, Google, and Facebook Are Killing America" -- turned a few heads.
I wasn't kidding when I argued that the growing amount of time we spend on Apple (Nasdaq: AAPL ) gadgetry, Google (Nasdaq: GOOG ) sites and smartphones, and Facebook's booming social network is sucking up time allotted elsewhere. Major companies and entire industries are facing disruption as interests flock elsewhere. Suggesting that the trend is destroying this country was entirely tongue-in-cheek, but more than a few critics missed the tongue. I guess I'll turn the other cheek.
Apple, Facebook, and Google are more popular now than they were five months ago. Roll with them if you can, but whatever you do, don't buy into companies that dare to get in their way.
Ride the right coattails
You can't buy into Facebook -- now 500 million strong and counting. However, shares of Apple and Google are a lot cheaper than you think, even with their healthy run in recent weeks.
According to market watcher Flurry, 19 million people spend an average of 22 minutes daily on applications running on Apple's iOS platform. This includes iPhones, iPads, and iPod touch players.
If that number doesn't seem substantial, Flurry compares it favorably to primetime's biggest television shows. Sure, we're pitting an entire platform against a single ratings winner, but there are three important nuggets to consider here.
- Flurry's data comes from its ability to monitor just 50,000 of the 250,000 available apps. I suspect that in reality, far more than 418 million daily minutes get devoted to App Store applications.
- The App Store is still in its infancy. Apple introduced it in the summer of 2008, and now it's competing against smaller marketplaces from its smartphone rivals.
- Flurry's stats on app usage apply every day, while most primetime shows run once a week -- when they're not on a rerun hiatus.
You've got a Facebook friend in me
Facebook's time suck is a growing black hole. According to the site, more than half of its user base logs into the site on any given day. The average user has 130 friends, further perpetuating the viral appeal of staying close and spreading the word.
People spend 700 billion minutes -- that's billion with a "b" -- on Facebook every month, with nearly a third of Facebook's users accessing the site through mobile applications as well.
As anyone who has seen The Social Network knows, Facebook wasn't even around until 2004, so where were these 700 billion monthly minutes consumed before?
Video game sales have been falling since early last year. Newspaper circulations continue to plummet. Pay television suffered its first sequential decline in cable and satellite television subscribers. Box-office receipts are inching higher as a result of pricier 3-D and IMAX (Nasdaq: IMAX ) screenings, but attendance is actually clocking in 2% lower this year. Event promoter Live Nation (NYSE: LYV ) posted a 7% decline in concert revenue in its latest quarter.
Wake up and smell the divergence!
Retail sales are improving. Folks are eating out again. Why aren't folks buying more $60 video games? Why is your paperboy carrying a lighter load this morning? Let's not be naive. These laggards aren't the victims of a recession that theoretically ended over a year ago. If revenue at that leisure stock you own still hasn't bounced back to pre-recession levels, there may be a cadaver in your portfolio.
Recognizing the winners
Google reports earnings this week. Wall Street's pros expect the world's leading search engine to grow its top line by 20%. Google alone isn't a bellwether for the online advertising industry, since its rivals will inevitably lag behind. Sponsors aren't earmarking 20% more for their campaigns than they did a year ago, so other forms of marketing will be almost certainly yield market share to Google.
Why not? Folks are spending a lot of time online, and Google runs the largest network of targeted advertising. The old scattershot way of smoking out leads is toast, and we can accept that. Why can't we accept that there's a similar shakeout within the leisure space?
What's working, and why? Here are a few of the sector's notable successes:
- Pay TV may have fallen, but Sirius XM Radio (Nasdaq: SIRI ) added 1.1 million net new accounts to its rolls over the past year. The way we spend on leisure is changing, but commuters still need to get to work, and premium radio is a welcome distraction during the one time that folks can't and shouldn't be consumed by connectivity.
- Netflix (Nasdaq: NFLX ) also seems immune to cable and satellite TV's couch-potato famine. The service's home-delivered DVD rentals and unlimited streaming video are an easy sell. More than 9 million of Netflix's 15 million subscribers are now streaming from Netflix's digital library, representing even more time sucked out of the leisure pie.
- OpenTable (Nasdaq: OPEN ) has blown past Wall Street profit targets all its quarters as a public company. Revenue for the online dining-reservations leader surged 37% in its latest quarter. One can argue that Facebook, Foursquare-ish apps, and Google Maps are encouraging social outings, since folks were going to eat anyway. OpenTable simply improves on the archaic model of calling in to book a table.
Investors need to work the math in this zero-sum game. Time spent on some endeavors means less time to go around elsewhere. If Google, Facebook, and Apple -- and let's go ahead and add Netflix into that fraternity -- are winners, it shouldn't be hard to figure out the losers.
These four companies aren't not killing America, but their collective success will kill a lot of American companies. Don't wait for the wake.
Could "time suck" really spell the end of many popular leisure stocks? Share your thoughts in the comment box below.
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