I was an early adopter of Amazon Prime, an early Netflix subscriber and cut the cord more than a decade ago. Over the last ten years, I have not missed traditional TV at all and recently when I turned on the TV in a hotel room, I was immediately reminded why I cut the cord. With cord cutting on the rise, the unbundled bundle is finally upon us. In addition to Amazon Prime and Netflix, I also now pay for YouTube premium to get rid of ads and recently signed up for Disney+ for my kids through a founders circle deal that required paying upfront for three years in exchange for a heavily discounted subscription price.
Viewers can also choose from Apple TV+, Hulu, HBO Now and myriad other over-the-top streaming services that have helped an aggregator and distributor like Roku (ROKU) more than double in price this year with an enterprise value that eclipsed $12 billion. While this spinoff from Netflix has had an impressive run, it is still less than one-tenth Netflix’s $126 billion enterprise value despite a significant drop in the stock price of Netflix over the last six months thanks to all the new streaming competition that has come online this year or expected to debut shortly.
To feed this incessant appetite for content, the warring parties in this streaming war are making a land grab for talent and content. Disney decided to pull its movies from Netflix in 2019, Disney’s CEO Bob Iger stepped down from Apple’s board of directors, HBO Max managed to wrangle Friends from Netflix and Netflix agreed to pay more than $500 million for global streaming rights for Seinfeld.
This succession of announcements reminded me of Lions Gate Entertainment (LGF.A). Content is king but the long tail of content doesn’t always deliver until there is huge demand for both new content and well recognized franchises. Lions Gate has plenty of popular franchises including Orange Is The New Black, Mad Men, Hunger Games and the more recently the John Wick trilogy. The company also has a deep library of movies with a specific focus on the action, comedy and horror genres. Every few years the company also manages to deliver a sleeper hit like we saw with Crash in 2004, which walked away with 3 Oscars and more recently La La Land, which grabbed 6 Oscars.
Consolidation in the industry in recent years saw,