New streaming TV options have launched at a frenzied pace over the last few years. With many subscription internet TV services to choose from, streaming entertainment has become ubiquitous in U.S. homes.
Consumers spend increasingly large amounts of time on streaming media, so TV providers are responding by rapidly migrating their advertising activity over to those streaming platforms.
The streaming phenomenon
The streaming phenomenon
We stream a lot of content. The average person spends 4.3 hours streaming video content each day.
Our streaming habits are generating a growing stream of revenue for content companies from subscriptions and advertising. The over-the-top streaming market is on track to grow from $172 billion in 2023 to $198.1 billion in 2024.
That growing revenue stream is making streaming stocks look like compelling long-term investments. Here's a look at the best streaming TV service stocks to invest in.
State of Streaming
The Motley Fool surveyed 2,000 Americans about their streaming habits and preferences to find out what the future might hold for streaming services.
Best streaming service stocks
Best streaming service stocks in 2024
There are many ways to gain portfolio exposure to streaming services. Here, we focus on the companies that are either pure plays or earn outsized returns on streaming.
The best streaming entertainment stocks include industry pioneer Netflix (NFLX 0.78%), entertainment giant Disney (DIS 0.59%), and streaming platform leader Roku (ROKU 2.75%).
Cash Flow
1. Netflix
As the company that started the streaming TV party, Netflix remains the largest streaming pure play, with more than 280 million subscribers. More than a third of video streamers rate Netflix as their favorite streaming platform due to its interface and user experience.
Netflix is a prolific producer of TV shows and movies to provide its growing user base with more content. It has also expanded into new areas to accelerate its business growth, including live sporting events and video games. Netflix has also started allowing advertisers to tap into its engaged user base.
The company's strategy has paid off. It's generating a growing stream of free cash flow. That's allowing it to start returning money to shareholders through a meaningful share repurchase program.
2. The Walt Disney Company
The much-anticipated Disney+ streaming service was launched in late 2019, just in time for the pandemic. By late 2024, Disney had 56 million domestic subscribers and another 66.7 million international ones. Disney also owns streaming services Hulu and ESPN+ in the U.S.
After years of heavy investment, Disney's direct-to-consumer streaming services are now profitable. That helped boost the entertainment, sports, and experiences giant's overall profitability.
The company's vertically integrated operations -- spanning valuable real estate assets in its theme parks, merchandising, broadcast television, and in-house video production technology -- give it plenty of cash to invest in new content.
Now well-established in the online TV era, Disney is poised to continue leading in the streaming revolution.
Vertically Integrated
3. Roku
Streaming TV has been a boon for the smart TV and streaming device maker. Roku has become the largest TV platform in the U.S., distributing content via The Roku Channel and acting as a hub for households to manage all their streaming subscriptions. The company has more than 85.5 million active accounts worldwide. They streamed a combined 32 billion hours of content in the third quarter of 2024 alone.
Roku distributes its smart TV software and streaming devices at minimal cost, making money instead through advertising and by managing subscriptions. In addition, the company acquired Nielsen's Advanced Video Advertising segment to maximize its streaming ad platform's effectiveness.
Acting as the gateway into internet-based TV for tens of millions of households, Roku is a top way to invest in the growing streaming industry. Much like other high-growth streaming platforms, though, Roku has struggled with controlling its costs. Monitor the company's progress as it turns the corner on profitability so it can operate sustainably.
Best streaming advertising stocks
Best streaming advertising stocks in 2024
Advertising software firms are key to helping streaming video content creators monetize their work and capture new subscribers. They also help companies to advertise within streaming media.
In this new era of abundantly available at-home entertainment, traditional media companies are faced with new challenges. Chief among them is paying for and profiting from making a TV show or movie.
Streaming shows and movies are monetized via monthly subscriptions and online ads rather than global box office or cable TV advertising. As companies seek to advertise via streaming media and content producers look for businesses wanting to purchase ad time, The Trade Desk (TTD -0.97%) and PubMatic (PUBM 0.26%) are well positioned to profit.
1. The Trade Desk
This cloud-based software company is a buy-side platform, meaning it helps automate the purchasing and management of marketing campaigns for companies that pay for advertising.
Streaming television (also known as connected TV, or CTV) has been one of the fastest-growing segments for The Trade Desk, and it's likely to remain so for some time as the entertainment industry rapidly migrates to internet-based video.
2. PubMatic
PubMatic is a sell-side ad platform, meaning its cloud software works with content creators themselves. A sell-side platform is a counterparty to a buy-side platform like The Trade Desk.
The company is profitable and focused on ramping up profit margins in the years ahead.
Other companies offering streaming
Media conglomerate companies offer streaming exposure, too
Telecommunications companies have streaming services, too, such as Comcast's (CMCSA 2.19%) NBCUniversal launching of Peacock. Comcast unveiled plans to spin off its news, sports, and entertainment assets (which include USA Network, CNBC, MSNBC, and others) in 2024. That will allow the company to focus on growing its broadband, wireless, streaming, studios, and theme park operations.
Many of the tech giants offer TV streaming subscription services as well. Amazon (AMZN 0.73%) has Prime Video and add-ons for Prime e-commerce subscribers. Apple (AAPL 1.88%) TV+ has been a steady addition to the iPhone company's "services" segment. And Alphabet's (GOOG 1.72%)(GOOGL 1.54%) YouTube TV is a newer subscription designed as an internet-based replacement for cable.
Legacy companies are also offering new ways to consume live TV over the internet as replacements for traditional cable packages and broadcast television. Paramount Global (PARA 0.76%) has reorganized its streaming segment, which includes Paramount+ and the ad-supported service Pluto TV.
Finally, entertainment conglomerate Warner Bros Discovery (WBD 1.91%), created via the merger of Discovery and WarnerMedia, has a streaming service: Max.
Related investing topics
Should you invest?
Is investing in streaming services right for you?
The streaming TV industry is a crowded space. Investors should keep in mind that this nascent segment of the entertainment industry is not yet very profitable. However, the field is consolidating to a few leaders focused on profitably accumulating subscribers and bringing their ad marketplaces online.
As a result of the sector's rapid changes, stock prices of streaming media companies can be volatile. The long-term growth potential of internet-based TV streaming is immense, with streaming services in the next decade set to recreate the way entertainment is consumed.
FAQs
FAQS about streaming stocks
What is the best streaming service to invest in?
Netflix is the best streaming stock to invest in. It's a pure play on streaming and the industry's leader. It's also growing at a solid clip and increasing its profitability and free cash flow.
What is the fastest-growing streaming company?
According to Forbes, Netflix was the fastest-growing streaming service in the first half of 2024. It added 2.6 million subscribers from December 2023 through the end of May 2024, nearly twice as much as Comcast's Peacock service, which added 1.4 million subscribers.
What are streaming stocks?
Streaming stocks are publicly traded companies that stream video or audio content over the internet.
Can you buy stock in HBO?
No, you can't buy stock in HBO. However, you can invest in Warner Bros. Discovery, which owns HBO.
