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There's a Silver Lining in this Crisis for Streaming Companies

By Stephen Lovely - Mar 24, 2020 at 9:08AM

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What do you do when you work from home? For many people, the answer is "watch Netflix."

It goes without saying that a global pandemic and wordwide economic panic are not exactly good for Netflix (NFLX 0.58%), Amazon (AMZN -0.03%), Disney (DIS 3.33%)Alphabet (GOOG 2.15%) (GOOGL 2.37%), and the rest of the streaming video gang. But these sorts of companies do have at least one thing going for them: When the world sits at home, the world watches TV. These days, that often means streaming video.

Theater seats face a laptop screen

Image Source: Getty Images

No place like home for the quarantine

Combatting a global pandemic involves a wide range of complex maneuvers and difficult policy decisions. But one of the most effective measures is (at least in theory) among the simplest: People should stay home.

Experts are urging people to do just that. In some places, policymakers are working to ensure it. Several countries in Europe have implemented national "shutdowns," while individual cities and states within the United States have shut down bars and restaurants, advised individuals to stay home, and -- in some cases -- issued shelter-in-place orders.

A stream runs through it

And what do people do when they sit around at home? According to the experts at Nielsen, they stream movies and TV shows.

More than usual, that is. Americans already spend 12 hours a day consuming media, Nielsen reports. In a finding earlier this year, Nielsen determined that 19% of all TV viewing hours in the United States were done on streaming services.

Get ready for more. Nielsen's analysis says that media consumption rates could rise by 60% thanks to the new normal of stay-at-home life. Streaming should be a key part of the equation, especially given recent analysis (including yet more analysis from Nielsen) that indicates that consumers are adding streaming subscriptions. That makes sense given the recent debuts of Disney+ and Apple's (AAPL 4.01%) Apple TV+, and there are few reasons to believe the trend will slow during a crisis that makes home entertainment more important than ever.

It's not just boredom that will trigger the increases in media consumption. Nielsen's analysis suggests that viewers will demand coverage of the very pandemic that's keeping them home. Viewers will want to keep up with new developments -- and, in some cases, will need to. That's less in Netflix's wheelhouse, but could be good news for live streaming services. (It's also virtually certain to lead to more viewing hours for cable and satellite, but it seems unlikely to lead to many new customers for legacy services that require in-person installations.)

Working hard or hardly working?

Work lives are affected by these recommendations and orders, too. New York City's bartenders are home (often without pay), but so are many of its bankers, graphic designers, attorneys, and engineers. Many of these professionals are home at the request of their employers, and many are working regular hours from home -- or, at least, they're supposed to be doing so.

Netflix and its peers long ago replaced Blockbuster Video rentals as the entertainment of choice for those who stay home instead of hitting the bars on a Friday night. Now, with hitting the bars no longer an option, streaming hours are set to rise. And we're not just streaming on "our" time, according to the experts at Nielsen. Workers at home consume more traditional TV than workers in offices by about three hours, Nielsen finds.

The emphasis on traditional TV in this finding makes sense given the importance of live news during a crisis. But streaming services appear to be getting a similar boost. In Europe, streaming services are voluntarily limiting video quality in order to cut down on an internet traffic logjam that has gotten out of control in the days since self-isolation and quarantining have become the norm in Europe. Notably, the announcements were made during the work week.

A fascinating factor

Naturally, this interesting twist within the crisis does not render streaming services recession-proof. Savvy investors know that nothing is that simple. They know that market crashes can destroy some companies while also turning relatively reliable stocks and broader market indices into brilliant short-term discount deals for smart investors with an eye on the long-term rebound. 

In a complex situation, Nielsen's findings are just one small -- but fascinating -- part of the picture. The unique nature of this joint health and financial crisis has created a home-bound army of nervous slackers sneaking a little Stranger Things in between their work tasks. For the companies employing these sneaky streamers, a drop in productivity may add insult to injury in a time of crisis. But for Netflix, Disney, Amazon, and the rest of the streaming crew, increased streaming hours offer at least a little solace at a time when frustration abounds.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$187.44 (0.58%) $1.09
Apple Inc. Stock Quote
Apple Inc.
AAPL
$143.11 (4.01%) $5.52
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,229.76 (2.37%) $51.60
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$105.83 (3.33%) $3.41
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,151.14 (-0.03%) $0.68
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,233.33 (2.15%) $47.07

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