Top 3 “FAST” (Free Ad-Supported TV) Streaming Stocks In 2022
If you were streaming shows at home back in 2017, odds are you were doing this on a small handful of platforms. For most, this included Netflix, Hulu, and Amazon Prime Video. Fast forward to today, and the “streaming game” has been largely disrupted. No longer is there a streaming monopoly, where a select few control the whole space. Instead, there are now so many options that it’s hard to keep up with.
For the most part, this is based on the fact that the barriers to entry for streaming have come down so much. When you combine this factor with the lucrative business model of streaming, allowing for consistent monthly revenue, it becomes a highly sought-after business model. In short, a lot of people copy and pasted the business model of Netflix.
Netflix began to face some significant headwinds in 2022, losing subscribers for the first time in a decade. This, combined with a broad market sell-off, spelled disaster for Netflix stock. Year to date, Netflix stock is down 71.8% as of Monday, June 13th, 2022. Netflix is no longer a “growth story,” being valued based on the future earnings potential of those prospective customers. You can’t call yourself a growth stock when you’re losing users, nor can you command the valuation of one for very long. In hindsight, it was inevitable that Netflix would sell off.
“FAST” Streaming Stocks
With this big shake-up in streaming, who is poised to do well? In this article, I’ll be covering three lesser-known streaming stocks that follow an ad-supported approach within their business model.
This is referred to as FAST or a “free ad-supported tv model.” Netflix has announced they’ll include ads as part of their cheaper service tiers later this year, similar to how Hulu has operated their business. These three streaming companies have already integrated this as part of their business model. Not to mention, it’s very easy for people to commit to a free streaming platform versus a paid subscription. If you want to find out if you have any subscriptions you’ve forgotten about that you’re actually still paying for, then Rocket Money can help save $720/year. As for the mass exodus from Netflix, those eyeballs are going elsewhere.
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Here are three stocks to look into:
1. Chicken Soup For The Soul Entertainment (CSSE)
For the life of me, I cannot tell you why this company is named this. For those of you that remember the “Chicken Soup For The Soul” book series, that’s the legacy business for this company. Don’t worry, that’s not why they’re on this list. They’re included because they own a subsidiary called Crackle.
Crackle is a free streaming platform featuring both original programming and acquired or licensed programming. Currently, it’s available in 21 different countries. On Crackle, you’ll find movies and TV shows that might be a little outdated, but still have a lot of interest behind them. For example, Seinfeld is offered here.
Chicken Soup For The Soul Entertainment could have a huge opportunity here with Crackle. All it takes is one hit show, movie, or documentary to build a loyal user base. They are regularly adding original content, as you can see in this press release here.
2. Genius Brands International (GNUS)
This is a global children’s entertainment company that I own shares of. Genius Brands operates a free ad-supported streaming app for kids called Kartoon Channel. It’s available almost everywhere at this point. In addition, they recently launched a premium offering called Kartoon Channel Kidaverse, which gives viewers access to premium content, an ad-free viewing experience, and a few other things.
Right now, Genius Brands is operating both an ad-supported version of their platform as well as a subscription-based version side-by-side. This is possible based on a series of strategic acquisitions carried out over the last year. For those keeping track, this is exactly what Netflix is trying to do, with plans on integrating ads as soon as later this year. Genius Brands owns the largest portfolio of children’s entertainment out there. They’re rolling this out over time alongside original content, including the hit shows “Rainbow Rangers” and “Stan Lee’s Superhero Kindergarten” (voiced by Arnold Schwarzennegger himself!) Later this year, “Shaq’s Garage” is coming out, featuring none other than Shaquille O’Neal.
Kartoon Channel is uniquely positioned. There isn’t a dominant player yet in the children’s streaming category. Recently, they signed a 20 year deal with Marvel licensing Stan Lee IP over to them for various purposes.
3. Roku, Inc. (ROKU)
Last on the list we have Roku. You might only think of them as a hardware company, selling televisions and miscellaneous streaming accessories. However, Roku now operates its own streaming platform called The Roku Channel.
This platform offers both free ad-supported content as well as premium content available through a subscription. This includes movies, TV shows, live news, and even sports events. You can visit The Roku Channel right now and stream content as well as live news for free, no account necessary. Since they’re already one of the most popular streaming and television hardware companies out there, this seems like a logical move to vertically integrate a streaming platform within it. This comes pre-installed on all Roku devices.
Whichever company you think might be a good investment, you can learn more about how to get started with investing here.
Disclosure: Author Ryan Scribner is long shares of Genius Brands International.
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