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Coronavirus impact: will video streaming get a boost?

Emma Rapaport  |  26 Mar 2020Text size  Decrease  Increase  |  
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As people across head into lockdown, our screen time is set to surge.

In China alone, the outbreak of COVID-19 and Chinese New Year holiday led to a 210 basis points increase in mobile time spent share in short videos during February 4th - 10th, compared with a similar time the month prior, according to QuestMobile.

For Morningstar analysts this will likely mean a huge uplift in video streaming service usage in the US and will tempt consumers to try new offerings.

Year-to-date performance of industries

stocks video streaming

Source: Morningstar. Year-to-date as of March 19, 2020

"For the market leaders like Netflix in the US, increased usage may not provide a material uplift in revenue, as most households already subscribe or have tried the service," equity analysts Michael Hodel and Chelsey Tam say in a new report new special report on how individual sectors are faring in the coronavirus-induced market turmoil and stocks to buy for a recovery.

"For newer entrants like Disney+, however, additional time spent provides an opportunity to accelerate adoption."

But not everyone will be a winner. Analysts say firms that plan to launch streaming services later in the year, like Comcast's NBC Peacock and AT&T's HBO Max, may see slower adoption than expected if pent-up demand to get out of the house leads to lower television viewing. The postponement or cancellation of the Olympics could also slow new launches.

While analysts expect some subscribers to drop off the services in the post-pandemic world, they say some might stay if they see value in the service.

Similarly, analysts say time on the inside will see a rise in gaming, especially console and PC games.

"[This will] potentially provide material revenue gains from both full-game sales and additional in-game purchases," they say.

"Global mobile game downloads were up 39 per cent in February as per Sensor Tower, while Apple's App Store in China registered a 62 per cent increase in game downloads."

Morningstar's special report 'Coronavirus: Market Temperature Check; Don't rush to check-out; stock up on quality companies' highlights 10 stock picks for each of the four main regions that equity analysts cover: North America, Europe, Asia, and Australia and New Zealand, including names in media and video streaming.

The report also highlights Morningstar's base view on the long-term economic impact of COVID-19.

Morningstar Premium members can access the full report here.

Or take a free trial to Premium and receive instant access.

Editor’s note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

is an editor for Morningstar.com.au

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