After a pivotal year for Steam that saw the industry leader lose its dominant position due to increased competition, 2023 will likely be another pivotal year. The introduction of live sports on popular platforms adds another dimension to the industry and may benefit some companies.
Amazon (AMZN -0.78%) When netflix (NFLX 3.80%) Some of the oldest players in the streaming industry have seen their respective stocks plummet by about 50% in 2022. As a result, there is a potential chance of finding a bargain if you are willing to hold for the long term.
So let’s see which company to buy this January.
1. Amazon
Last year’s macroeconomic headwinds hit Amazon particularly hard, with its e-commerce business suffering a sharp decline in profits. In the third quarter of 2022, the company’s North American segment revenue increased 20% year-over-year to $78.8 billion, while operating income fell to his $412 million loss. Similarly, Amazon’s international segment revenue fell by 4.8%, leading to an operating loss of $2.4 billion.
Despite losses in e-commerce, the company’s Prime subscriptions, which include services like expedited shipping and streaming platform Prime Video, saw revenue grow 9.1% to $8.9 billion. Amazon’s Prime Video, like many other services, is included in Prime membership, so it’s unique to the streaming industry and could lead subscribers to abandon the service in favor of another entertainment platform. is lower.
As a result, the company has grown its global subscriber base to more than 200 million, and Amazon has a 19% market share in streaming as of Q3 2022, second only to Netflix. .
Last year, Amazon worked to increase its market share by acquiring MGM, home of movie franchises such as: james bond When Rocky, at $8.5 billion.It also entered into a lucrative partnership with the NFL to broadcast exclusively thursday night football on prime video.
Amazon has made positive strides in streaming in 2022, but the most compelling part of its business is its cloud computing platform, Amazon Web Services (AWS). In Q3 2022, cloud services provided him 100% of Amazon’s operating profit, reaching $5.4 billion, with revenue up 27% year-over-year to bring him to $20.5 billion.
The past year has proven that the streaming industry is in a state of flux and, as a result, volatile. However, Amazon’s diversified businesses have shown it is capable of overcoming market volatility, with AWS making up for his e-commerce losses in 2022.
2. netflix
After years as a streaming king and almost single-handedly founding the industry in 2007, Netflix has seen its throne shaken in 2022. Over 1 million members in his first two quarters. In Q3 2022, subscriber growth resumed with the addition of 2.4 million new members, bringing the total to 223.09 million.
However, Netflix couldn’t beat disneytotal streaming subscribers for the second straight quarter, House of Mouse reports 235.7 million members in Q3 2022.
Netflix has responded to increased competition by working to diversify its business. Until last year, almost all of the company’s revenue relied on streaming subscribers. But the launch of his ad-supported tier this November marks the company’s entry into the lucrative digital advertising industry. This new year will be a time for Netflix to fine-tune its advertising offerings and grow its ad revenue.
Additionally, the streaming giant has launched Netflix Games in November 2021. This is another library of mobile games available to Netflix subscribers. The company expanded its gaming division last year by acquiring more developers, revealing a strong interest in cloud gaming. By creating, we’re starting to build relationships with some of the biggest studios in the industry.
Netflix’s restructuring business is still in its infancy, and time is critical to its success. But the move the company has made is favorable for long-term growth.
Amazon and Netflix have a challenging year in 2022, entering the new year with a lot of work ahead.As a result, alternative streaming stocks such as apple and Disney are more attractive investment options. However, if you’re obsessed with adding one of these stocks to your portfolio, I recommend buying Amazon.
An investment in Amazon would likely need to be held for the very long term. This is because it will take time for the e-commerce business to return to profitability after the recession subsides. However, AWS’s leading market share of 34% in a fast-growing industry like cloud computing makes AWS more diverse than Netflix and feels more reliable in the long run.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no positions in any of the stocks mentioned. The Motley Fool has positions and endorses Amazon.com, Apple, Netflix and Walt Disney. The Motley Fool’s U.S. Headquarters has received $145 long call from Walt Disney for January 2024, Apple’s long call for $120 for March 2023, and short $155 for Walt Disney for January 2024. Cole recommends Apple’s March 2023 $130 short call. The Motley Fool’s U.S. headquarters has a disclosure policy.
