"The video market is in full disruption and this year could be the cord cutting tipping point," analyst Michael Nathanson wrote to clients. "Media companies will need to master a whole new suite of skill sets to win going forward," with content creation, user interfaces and "churn mitigation strategies" among the factors that could determine the next generation of winners in the market.
Consumers have been abandoning traditional media bundles for years, instead looking to services like Netflix Inc. or Walt Disney Co.'s recently launched Disney+ service, which has signed up more than 10 million subscribers since launching in November.
Streaming services have made in-roads into a number of major categories of video entertainment, including TV shows and movies.
In a measure of how big streaming has become, Wells Fargo Securities wrote that between November 17-23, "The Mandalorian," a series from Disney+ set in the "Star Wars" universe, was the "most in-demand show in OTT and overall on a linear+OTT basis."
OTT stands for "over the top" content, which bypasses cable boxes. Linear TV airs at set times, as opposed to being on-demand, as with streaming. The firm cited data from Parrot Analytics in its report, which was dated Nov. 29.
Geetha Ranganathan, an analyst at Bloomberg Intelligence, on Monday said that streaming was "absolutely" contributing to a weak overall U.S. box office in 2019. "This becomes a bigger problem next year especially with a weaker slate (absence of big franchises from Disney) and the streaming wars going into high gear," she said in an interview.
Live entertainment, especially sports, has proved to be something of an exception to this trend.
MoffettNathanson called sports viewers "the most entrenched" among those who continue to pay for traditional TV subscriptions. Citing work with analytics firm Altman Vilandrie & Co., he estimated that regular sports viewers made up 60% of current TV subscribers.
They make up "the potential floor for the pay TV ecosystem, as long as the major sports leagues' rights remain exclusive to the pay TV bundle." He added, "that leaves 40% of today's Pay TV universe at risk" over the next five years.
As part of its call, MoffettNathanson reiterated its sell ratings on both AT&T Inc. and Dish Network, while recommending investors buy Disney shares.
Among the biggest beneficiaries of the trend in 2019 has been Roku Inc., which acts as a service-agnostic platform for streaming content. The stock has more than quadrupled thus far this year, rising amid the "exuberance over all things streaming," according to Morgan Stanley.
The firm downgraded Roku on Monday, writing that while it was bullish on the company's growth prospects, the risk profile looked "skewed to the downside" after the 2019 surge.
