Core Insights - Apple TV+ is experiencing growth due to a strong content portfolio, including successful shows like Murderbot, Severance season 2, and Mythic Quest season 4 [1] - The service achieved a record-breaking 81 Emmy nominations this year, highlighting its competitive edge in original content [2] - Apple TV+ revenues are included in Apple's Services business, which saw a 13.3% year-over-year growth to $27.42 billion [4] Content Performance - Severance received 27 Emmy nominations, while The Studio made history with 23 nominations, contributing to Apple TV+'s overall success [2] - The original film F1: The Movie grossed over $500 million globally, with additional revenue expected from streaming and video-on-demand [3][11] Financial Performance - Services revenues, including Apple TV+, accounted for 29.2% of Apple's third-quarter fiscal 2025 sales, with double-digit growth in paid accounts and subscriptions [4][11] - The Zacks Consensus Estimate for Services sales is projected at $28.04 billion, indicating a 12.3% growth year-over-year [5] Market Competition - Apple TV+ faces significant competition from Amazon Prime Video and Netflix, with market shares of 21% and 20% respectively, compared to Apple TV+'s 8% [6] - Netflix's subscriber growth is driven by a strong localized content portfolio, while Amazon's advertising business is also contributing to its revenue growth [7][8] Stock Performance and Valuation - Apple shares have declined 9.8% year-to-date, underperforming the broader technology sector [9] - The forward 12-month Price/Earnings ratio for Apple is 29.24X, higher than the sector average of 27.65X, indicating a premium valuation [16]

V i e w p o i n t | 20 Aug 2025 05:00:00 ET │ 41 pages North America Internet Internet Traffic Trends Analysis: Positive Trends for META, AMZN, DASH, UBER, EBAY, W, GDDY CITI'S TAKE July website traffic from Similarweb and app data from Sensor Tower, data aggregated in partnership with Citi's Research Innovation Lab, highlight positive trends for META, AMZN, DASH, UBER, EBAY, W, and GDDY, and mixed-trends for Online Travel and SMB Servicers. On META, we highlight IG's mins/DAU rose +12% Y/Y to ~53 mins, lik ...

Core Insights - Apple has increased the price of its streaming service, Apple TV+, by 30%, raising the monthly cost from $9.99 to $12.99, effective within 30 days for existing subscribers [1] - Despite the price hike, Apple TV+ remains cheaper than most ad-free competitors, with Amazon Prime Video at under $12 and Paramount+ at $13 for ad-free plans [2] - The rise in subscription costs for paid streamers like Apple TV+ may drive viewers towards free ad-supported streaming services (FASTs) [3][9] Pricing Changes - Apple TV+ price increased by 30% to $12.99 per month from $9.99 [1] - Annual plans and Apple One bundle prices remain unchanged [1] Competitive Landscape - Apple TV+ is still less expensive than major ad-free competitors [2] - FAST services like YouTube and Tubi are experiencing significant growth, with YouTube capturing 13.4% of connected TV watchtime in July [3][8] Market Trends - The increase in subscription prices for paid services may lead to a shift in consumer preference towards free streaming options [9] - Roku's FAST service achieved its largest monthly viewership increase, reaching a 2.8% share of US connected TV time in July [8]

Group 1 - Chinese companies are emerging in the Southeast Asian video streaming market, with iQIYI planning to launch original content in Thailand and Tencent's idol discovery programs gaining popularity [1][2] - iQIYI's Thailand subsidiary emphasizes that Southeast Asia is their most important market outside of mainland China, focusing on introducing original content and expanding services to countries like Thailand, Indonesia, and Malaysia [1] - Tencent launched its video streaming service WeTV in Southeast Asia in 2019, focusing on original content and planning to produce idol discovery programs featuring local talents starting around 2024 [1] Group 2 - The Southeast Asian video streaming market, while smaller than China and the US, is seen as a new revenue source for Chinese companies, with a growing young population and increasing income levels [2] - According to Dataxis, as of early 2025, American companies dominate the market with nearly 60% market share in Singapore, while Chinese companies have captured about 40% market share in Thailand, surpassing the US [2] - Chinese content and products, exemplified by "Labubu," are gaining popularity in various sectors, including home appliances and electric vehicles, indicating a growing influence of Chinese brands in Southeast Asia [2]

Core Insights - Amazon is evolving beyond its traditional e-commerce identity, developing a multi-faceted empire that includes cloud computing, advertising, and entertainment [1] - The company's e-commerce growth is slowing, with North America segment sales increasing by only 8% year-over-year and international segment revenue growing by just 5% [4] - Amazon's core commerce revenue, excluding advertising and subscription revenue, grew at around 5% to 6%, indicating a maturing business [4] - Despite net sales reaching $126 billion in Q1 2025, Amazon's operating profit was only $6.8 billion, resulting in a margin of 5.4%, which is low for a tech giant [5] - Increased competition from low-cost challengers like Temu and Shein is putting pressure on Amazon's e-commerce segment [6] - Amazon is enhancing its logistics network and launching low-cost e-commerce initiatives to compete effectively [7] Advertising Growth - Amazon's advertising business is experiencing significant growth, with ad revenue increasing by 18% year-over-year to $13.9 billion in Q1 2025 [9] - The advertising segment is high-margin, potentially contributing more to Amazon's bottom line than its retail business [9] - Unique advantages of Amazon's advertising include reaching customers at the point of purchase, leading to higher conversion rates compared to other platforms [10] - The introduction of ads in Prime Video has expanded Amazon's advertising reach, making it one of the largest ad-supported streaming platforms globally [11] - Amazon's closed-loop attribution model allows brands to track the effectiveness of their ads throughout the customer journey, providing valuable insights [12] Investment Implications - Amazon's long-term profit potential is shifting towards high-margin businesses like cloud computing and advertising, with the latter gaining momentum [13] - While retail faces challenges, stabilizing the commerce segment while leveraging faster-growing areas could lead to stock appreciation over time [14] - Understanding the growth dynamics within Amazon's various segments is crucial for assessing the company's future prospects [14]

Core Viewpoint - The Walt Disney Company is expected to report its third-quarter fiscal 2025 results on August 6, with revenue estimates at $23.67 billion, reflecting a modest growth of 2.23% year-over-year, and earnings per share expected to be $1.47, indicating a growth of 5.76% year-over-year [1][12]. Revenue and Earnings Estimates - The consensus estimate for revenues is $23.67 billion, suggesting a 2.23% increase from the previous year [1]. - The earnings per share consensus has decreased by a penny to $1.47, indicating a year-over-year growth of 5.76% [1]. - The estimated revenues for the Entertainment segment are projected at $10.84 billion, representing a 2.5% increase year-over-year [7]. - The Experiences segment is estimated to generate $8.4 billion in revenues, showing marginal growth of 0.3% year-over-year [11]. Recent Performance and Trends - In the last reported quarter, Disney achieved an earnings surprise of 22.88%, with an average surprise of 16.38% over the last four quarters [2]. - The Entertainment segment reported an operating income of $1.3 billion, a significant increase of 61% year-over-year [5]. - The direct-to-consumer segment's operating income surged to $336 million from $47 million a year earlier, with expectations for continued profitability growth [6][8]. - Disney+ gained 1.4 million subscribers, while Hulu added 1.3 million subscribers in the fiscal second quarter, contributing to positive momentum [8]. Strategic Developments - The Sports segment benefited from a 29% year-over-year growth in ESPN's domestic advertising revenues, with new initiatives expected to enhance performance [9]. - Disney announced its seventh theme park resort in Abu Dhabi, which is anticipated to significantly impact the Experiences segment and access a large global audience [10]. - The company is trading at a forward P/E of approximately 18.61x, which is below the industry average of 20.25x, indicating a potentially attractive valuation [15]. Investment Considerations - Disney presents a compelling buy opportunity ahead of the third-quarter earnings, supported by strong fundamentals and multiple growth catalysts [18]. - The integrated ecosystem of Disney+, Hulu, and ESPN creates sustainable competitive advantages, especially as rivals face streaming losses [18]. - The convergence of streaming profitability, international expansion, and robust operational momentum positions Disney favorably for future growth [19].

Core Viewpoint - The rise of TV remote control apps is driven by the high penetration of smart TVs in American households, with an average of 2.3 TVs per household and adults spending 32 hours per week watching TV, creating a significant demand for these apps [4][10]. Group 1: Market Overview - In May 2023, TV remote control apps achieved over 20 million downloads, generating $11 million in user spending, with the U.S. being the primary revenue market [4][5]. - Over the past 12 months, more than 21 TV remote control apps have generated over $1 million in in-app purchase revenue, with the highest revenue app reaching $16 million in 17 months, averaging nearly $1 million per month [5][8]. Group 2: User Behavior and App Characteristics - Users exhibit low brand loyalty in this category, often selecting apps based on search rankings rather than brand recognition, which presents opportunities for new developers [4][8]. - The majority of TV remote control apps are available on Google Play, with fewer than 500 on the App Store, yet iOS apps generate significantly higher in-app purchase revenue [8][9]. Group 3: Product Features and Monetization - The top TV remote control apps typically offer features such as multi-brand support, voice input, and screen mirroring, enhancing user experience [15][17]. - The primary revenue model for these apps combines in-app advertising (IAA) and in-app purchases (IAP), with most requiring subscriptions for full functionality [18][20]. Group 4: Growth Strategies - The growth of TV remote control apps relies heavily on app store optimization (ASO) and Apple Search Ads (ASA), with successful apps utilizing high-frequency keywords to improve visibility in search results [24][25]. - The success of these apps is often linked to user acquisition strategies rather than the inherent value of the app, as many users forget to cancel subscriptions after free trials [27].

Core Viewpoint - Investors showed a lukewarm response to Netflix's Q2 report despite favorable results, with the stock down 5% in morning trading after a significant year-to-date increase of over 30% and nearly 500% over the last three years [1][2]. Group 1: Q2 Financial Performance - Netflix's Q2 net income reached $3.13 billion or $7.19 per share, exceeding the Zacks EPS Consensus of $7.07, with a year-over-year EPS increase of 47% from $4.88 in Q2 2024 [3]. - Q2 sales totaled $11.07 billion, a 16% increase from the previous year, although slightly missing estimates of $11.08 billion [3]. - The operating margin improved to 34.1%, up from 24% a year ago, and free cash flow surged 91% to $2.3 billion [3]. Group 2: Subscriber Growth - Netflix is estimated to have added 5.1 million new net subscribers in Q2, which is below the forecast of 6 million and down from 8.05 million in Q2 2024 [5]. - Total subscribers have surpassed 300 million, bolstered by global reach, a strong content pipeline, and growth in the ad-tier service, maintaining a lead over competitors like Disney and Amazon [7]. Group 3: Revenue Guidance and Margin Outlook - Netflix raised its full-year 2025 revenue guidance to $44.8-$45.2 billion from a previous forecast of $43.5-$44.5 billion, with a projected 14% growth this year [8]. - The operating margin guidance was slightly increased from 29% to 29.5%, although analysts expected a range of 30-31% [9]. Group 4: Valuation Metrics - Netflix's forward P/E ratio stands at 50X, significantly higher than the S&P 500's 24X and also above Disney's 21X and Amazon's 35X [11]. - The elevated valuation may have contributed to the muted excitement surrounding the Q2 results, as investors anticipated more substantial upside surprises [13]. Group 5: Investment Outlook - Netflix currently holds a Zacks Rank 3 (Hold), with growth expectations already reflected in the stock price, yet the forecast indicates over 20% EPS growth for FY25 and FY26, suggesting potential for the stock to align with its high P/E valuation [13].

Core Insights - Streaming services have surpassed the combined share of broadcast and cable TV viewing for the first time, representing 44.8% of total TV viewership in May 2024 [2][10] - The growth of streaming has been significant, with a 71% increase over the past four years, while broadcast and cable viewing have declined by 21% and 39%, respectively [2][4] Streaming Growth Factors - The rise of streaming is attributed to three main factors: the popularity of free ad-supported streaming TV (FAST) channels, the growth of YouTube, and the adaptation of legacy media companies to cater to streaming-centric consumers [4][8] - In May 2021, only five streaming platforms exceeded 1% of total TV viewing, but this number has increased to 11 platforms as of the latest report [4] Popularity of Free Streaming Options - Free channels like Pluto TV, Roku Channel, and Tubi accounted for 5.7% of total TV viewing in May, surpassing any individual broadcast network [5] - YouTube has seen a remarkable 120% increase in viewership since 2021, representing 12.5% of all television viewing in May, marking its highest share to date [6][7] Transformation of Traditional Media - Traditional media companies are increasingly transforming into streaming-first entities, with platforms like Hulu, Paramount+, and Peacock complementing linear TV rather than competing with it [8] - Major media companies are undergoing restructuring, with Warner Bros. Discovery planning to separate into a streaming and studios company and a global networks company, while Comcast is spinning off most of its NBCUniversal cable network portfolio [9] Subscription Service Performance - Netflix has emerged as the leading paid subscription service, with a 27% increase in viewing over the past four years, maintaining its position as the top provider in total TV usage [10]

Core Insights - Netflix's international business is a significant growth driver, with Q1 2025 revenues increasing by 12.5% year over year, primarily due to strong performance in international markets [2][9] - The company plans to invest €1 billion (approximately $1.14 billion) in Spain from 2025 to 2028 to enhance its content production and operational presence in the EMEA region [3][4] - Netflix's focus on regional content is contributing to its international growth, with expansions planned in key markets such as India, Mexico, and Brazil [5] Financial Performance - In Q1 2025, international markets accounted for nearly 44% of Netflix's total revenues, with EMEA revenues growing by 15% to $3.4 billion and APAC revenues increasing by 23% to $1.26 billion [2][9] - The Zacks Consensus Estimate for Netflix's 2025 revenues is $44.47 billion, reflecting a year-over-year growth of 14.01%, while earnings are estimated at $25.32 per share, indicating a 27.69% increase from the previous year [10] Competitive Landscape - The streaming market is becoming increasingly competitive, with Amazon Prime Video and Disney+ posing significant challenges to Netflix's market dominance [6][7] - Disney+ is accelerating its global growth by increasing the production of international original content, which directly competes with Netflix in key overseas markets [7] Valuation Metrics - Netflix shares have gained 36.6% year to date, outperforming the Zacks Broadcast Radio and Television industry's return of 24.7% [8] - The company trades at a forward 12-month price-to-sales ratio of 10.95, significantly higher than the industry's forward earnings multiple of 4.12 [10]