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In 2020, the media and entertainment industry witnessed a massive surge in demand amid COVID-19-induced lockdowns as restrictions forced everyone to stay indoors. The soaring demand served as a bonanza for streaming platforms and companies such as Disney pounced at the opportunity and rushed to make complete structural changes in the organisations, keeping in mind the future business prospects.
On that note, let us glance at three media and entertainment companies and evaluate their performances.
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Netflix (NASDAQ:NFLX)
Netflix started as a rental DVD business and is now one of the biggest companies in the media and entertainment space. Last month, the company announced it had surpassed 203 million subscribers worldwide. Armed with a robust and scalable business model, the entertainment behemoth has been performing far above expectations. Its operating margins have expanded with Netflix gaining more and more subscribers.
Recently in its fourth-quarter results, the streaming giant told investors that they should expect to be on the verge of becoming cash-flow positive in 2021, which is quite an impressive and ambitious announcement to make. By the end of Q4, its free cash flow totalled US$1.9 billion. Another major highlight of Netflix's 2020 performance is how it gained customers amid vigorous competition in the market.
Moreover, the company also reduced its marketing budget, proving its marketing efficiency by and large. Controlling content spending primarily resulted in a positive cash flow for 2020.
Image Source: © Baronefirenzeit | Megapixl.com
Sony Corporation (NYSE:SNE)
Like online streaming, even the videogame industry continues to thrive on the back of demand propelled by lockdown and other pandemic-related restrictions. Even in 2021, people are continuing to buy gaming consoles.
According to NPD Group, console sales rocketed to a 10-year high this January as people are confined to their homes.
In terms of total dollars spent, the pandemic has helped Sony Corporation. Its SNE PlayStation 5 emerged as a winner during this period, one of the main reasons being its price. In the United States, spending in the gaming segment grew 44% in January.
Sony stated that it is expecting an earnings growth rate of 92.7% for the current year. The company shipped 4.5 million units of PlayStation 5 consoles worldwide in 2020. Its gaming business revenue grew about 40% higher, reaching US$2.39 billion.
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ViacomCBS (NASDAQ:VIAC)
In the month of January, the ViacomCBS share price increased substantially as the company announced its ambitious plan to launch a streaming platform. For many years, the legacy TV network provider has been facing competition from the new players in the segment. In January, the stock also received a small help from a market wide short squeeze. Both the scenarios pushed ViacomCBS stock higher at the start of the new year.
Its new streaming service Paramount+ will be launched on March 4, 2021. It is believed that investors will boost ViacomCBS' valuation once the streaming platform is launched. As seen in the past, the launch of cutting-edge streaming services by the media stocks like Disney (NYSE:DIS) is generally greeted by investors’ thumbs up.
