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ETFs to Shine Bright on Rising Video Streaming Trend

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The coronavirus crisis has forced people to maintain social distancing and work remotely.  Strikingly, even as the rebooting of the U.S. economy happens in phases and social-distancing restrictions are being eased, people are increasingly opting for contactless operations. It’s largely because the pandemic has brought about some changes in lifestyles.

The outbreak continues to expand globally as the total number of cases has crossed 24 million, according to Johns Hopkins University. Meanwhile, more than 5.8 million coronavirus cases have been registered in the United States, with a death toll of at least 180,000. Per a CNN report, an ensemble forecast published by the United States Centers for Disease Control and Prevention now projects more than 200,000 coronavirus deaths with an estimated 195,824 to 207,269 in the United States by Sep 19.

In such a scenario, it feels like the second half of 2020 will continue to bear the brunt of the pandemic with increased demand for in-house entertainment.

Coronavirus Drives Video Streaming

More and more people are spending time at home, in keeping with social-distancing guidelines due to the pandemic. As a result, people are resorting to streaming platforms like Netflix (NFLX), Amazon Prime or Disney+ (DIS) or turning to social media platforms like Facebook (FB) and Twitter (TWTR) for in-house entertainment. In fact, going by data from Grabyo’s “At Home Video Trends—U.S. 2020” study, people in the United States are spending 22% more on streaming than in January 2020 along with spending increase of an average of $1 billion a month, according to a Cord Cutter News article.

The study also reflects that 89% of Americans are spending on a video service, with 33% of those buying at least one new streaming service since March. The report also suggests that people plan to maintain all subscriptions even after the easing of pandemic-related restrictions. Demographically, of the total American video customers, 65% aged between 50 and 64 and 50% above 65 are now paying for online streaming, per the report.

Going by Nielsen’s latest Total Audience Report, as of this year’s second quarter, streaming accounts for one-fourth of all television minutes viewed. Notably, U.S. people watched an average 142.5 billion weekly streaming minutes last quarter compared with 81.7 million hours in the second quarter of 2019, per the report.

Riding the trend, streaming giant Netflix added 10.1 million new subscribers globally in the second quarter, up from 2.7 million additions seen in the year-ago quarter and the company’s own guidance of 7.5 million. In fact, Netflix doubled its subscriber growth in the first half of this year compared with 2019.

Also, Disney’s Disney+, which was launched on Nov 12, 2019, added 57.5 million paid subscribers as of Jun 27. As of Aug 3, Disney+ subscriber base crossed 60.5 million.

ETFs to Ride the Tide

Streaming services have been gaining popularity amid the coronavirus crisis and against this backdrop, investors can consider the following ETFs:

The Communication Services Select Sector SPDR Fund (XLC - Free Report)

This ETF offers exposure to the communication services sector of the S&P 500 Index and has accumulated $11.13 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket. The product charges 13 bps in annual fees (read: ETFs to Click as Facebook Tops $300 on E-Commerce Bets).

Invesco Dynamic Media ETF (PBS - Free Report)

This fund provides exposure to companies engaged in the development, production, sale and distribution of goods or services used in the media industry by tracking the Dynamic Media Intellidex Index. It holds 32 stocks in the basket. The product has been able to manage $38.3 million in its asset base. It has 0.63% in expense ratio (read: ETFs to Watch as Netflix Drops on Weak Subscriber Outlook).

iShares Evolved U.S. Media and Entertainment ETF

This actively-managed ETF employs data science techniques to identify companies with exposure to the media and entertainment sector. The fund holds 90 stocks in its basket. It has accumulated $11.2 million in its asset base and charges 18 bps in annual fees (read: ETFs to Play New Trends Triggered by COVID-19).

Multifactor Media and Communications ETF

This ETF targets a wide range of U.S. media and communication stocks to exploit the sector's opportunities by tracking the John Hancock Dimensional Media and Communications Index. It holds 54 stocks in its basket. JHCS has managed assets worth $26.7 million and charges 40 bps in annual fees.

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