Product and Service

Companies included in streaming video service sector in video &audio goods and service industry primarily operate digital video subscription service available to subscribers on internet –based devices.


Demand for Product and Service

As indicated by the typical company data, the demand for streaming service and content (including drama and film) has been strong and growing fast in the past three years thanks to shifting of viewers’ habits to internet-based media and reduced costs of stream subscription.

The Sector

Sector’s Current, Trend, Causes behind trend, and Future

Current and Trend
  1. Generally, the demand, from consumers, for streaming content (subscription) has been very strong and quickly increasing. Data proves the fast increase in number of subscribers and as well increase in spending on subscription in both US and international market.
Causes behind the trend
  1. Changes (from TV to internet) in consumers’ viewing habit and increasing accessibility to internet video content may be the major reason for changes in streaming video booming.
  2. Increasing demand for high quality content and lower costs of streaming subscription, in terms of absolute price, flexibility, network rentals, and more choices of content help bring more viewers for streaming video service provider.
Industry Future
  1. As upward trend in this industry continues, many streaming companies may continuingly gain subscribers and revenue, which in return will enable them to acquire and produce more high quality contents and grab more clients from TV market.
  2. Compared with OTT service, which uses integrated data center to lower distribution costs, the streaming service uses integrated subscribers to lower costs and thus owns better position at current technology condition.


General Financial Performance of Companies In the Sector

It seems that demand for subscription for streaming service that companies in this sector provide has been strong and growing fast in the past three years as indicated by increasing number of subscribers and as well increasing spending on subscription. Domestic subscribers have been seen growing at a more than 10% annual rate in the past three years according to typical drama and film streaming service provider. International subscribers have been seen growing at more than 40% rate during the same period of time. The average spending including rising price and plan mix has been seen growing at 10% and 17% annual rate for domestic subscribers and international subscribers respectively.
We have also seen fast grow in subscription for content of education and fitness from service provider.
The fast growth in revenue has brought those companies higher margins while increasing spending on marketing was accompanied. The typical company (drama and film) in this sector has an about gross margin of 38% in 2018, with a SG&A as percentage of sales of about 20% and R&D as percentage of sales of 8%, and operating margin of 10%.
The typical enterprise price/EBI ratio is 180 (12 months trailing).

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