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War of the World: Apple, Amazon, Netflix, Fight for Billions a Day

Billions a Day

The was originally published to

Some of the information we will cover may feel like a surprise. Our purpose is to provide institutional research to all investors and break the information monopoly held by the top .1%.

The battle for online video and streaming video on demand (SVOD) has rapidly turned into a free for all and may be the only part of technology where Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN), Alphabet's Google (NASDAQ:GOOG), Facebook (NASDAQ:FB) and Twitter (NASDAQ:TWTR) are all pouring money into the fight.

There's a method behind the madness -- while each of those companies have different ecosystems to defend and markets to own, engagement is now measured in billions per day. It simply will not be the case that each company wins. So let's find the winners, right now.

The video realm falls into two pieces, the first is online video. Both Facebook and Snapchat recently claimed that they receive over 8 billion video views a day from their user base. Twitter's Periscope announced that it had doubled the number of broadcasts viewed in just three months since the company added Periscope directly into Twitter timelines.

Of course, there's Google's YouTube -- check out this statistic:

Google's You Tube has more viewers aged 18-49 on mobile alone than any U.S. cable network.

In fact, here are the most visited online video sites from our friends at Statista:

Google sits at the top, with Facebook right behind it. But this is just one piece of the puzzle -- the other sits in SVOD:

For all intents and purposes Netflix invented streaming video on demand (SVOD) as a legitimate avenue to watch television and movies on our couches. The company has over 75 million subscribers and it now spans more than 190 countries. Here is the company's worldwide footprint, with 130 new countries to be added this year (in green).

via Statista

SVOD proliferation is still in its infancy. In fact, less than half of U.S. households even have access to it. Netflix is more than 90% of those households and Amazon's Prime is in 40%.

Google created its YouTube Red service and the company is very quietly creating original content and releasing new films from other studios under its subscription service. When we take into account the absolute colossal size of YouTube's free service, there is a path to a growing business through YouTube Red.

Amazon just today announced that it will unbundle its SVOD Prime product for a monthly fee of $8.99. This is the first time Amazon has de-coupled its video service from its broader Prime membership service which includes so many goodies it's almost too much to include in this note -- but most famously, it has free shipping. The last number we got from the company showed that Amazon Prime has 54 million subscribers and that it showed 50% year-over-year growth.

As incredible as all these numbers are, none of this is the real war and we know it isn't because we have yet to mention Apple.

Very quietly Apple announced that it too was starting to produce original content -- the first coming from Dr. Dre. But that was a slight misdirection. You see, Apple recognizes this video war -- on both fronts, and it doesn't want to be in one part or the other, it wants all of it and then it wants the cable business too.

The Apple TV sounds like any other digitally online connected TV set. Sales are certainly booming, but who cares, right? It turns out not only do Facebook, Google, Netflix, Amazon and Twitter care, but all of cable cares because Apple is trying to eviscerate the entire industry, and here's how:

It's not TV that Apple is after -- it's the central being of our entertainment and digital lives and here's how Apple TV is actually winning.

That's a snapshot of an Apple TV front menu -- it looks harmless enough. The Wall Street Journal came out with a review and perhaps the most salient part was so simply stated that it made it frightening:

"Think of Apple's fourth-generation box as a way to turn your TV into a giant iPhone."

Source: WSJ

The Apple TV comes with its own software development kit and its own app store, i.e. its own Apple TV ecosystem. There are 133 million households in the United States alone with a cable TV subscription and 75% of those people watch TV everyday (Source: AYTM).

Take those 133 million cable subscribers and the 75 million SVOD viewers in the United States alone, along with the billions of online video views and what we start to see is a broader view -- video -- from any source, on any medium, at any time, for any price from free to a subscription. The Apple TV will take all of it.

Apple is rumored to be working on a subscription TV service, one that would serve as a replacement for traditional pay-TV providers at about $40 a month.

Here's how it will work: As the cable providers try desperately to stop the cord-cutting phenomenon they now allow subscriptions to their channels as apps. Apple is going to bundle ESPN, HBO Go, Showtime, Disney, USA or whatever other cable networks we love – and it will also combine Netflix, Amazon Prime, YouTube and Facebook. Remember that image we showed you above -- here it is again, and now, look at the icons:

Apple will be the connector, the bundler, the ecosystem and everybody watching video of any type on any medium is going to be writing checks to "Apple, Inc." Everyone else becomes an "app."

Of course, there are other Smart TV's with similar functionality. But none of them have a one billion unit install base of hardware that Apple has, and none of them are so powerful that the cable companies will bend on a knee to be part of a bundled package.

The totality of this video business, when taking into account SVOD subscriptions, cable subscriptions, online advertising, online reach and engagement, reaches nearly one trillion dollars. That's the war and Apple has no interest in playing for a piece of the whole, it just wants the whole in and of itself. Watch the war when Amazon, Google and Facebook step in.

This is what institutional research reads like -- it spans all thematic trends -- it goes further than the headlines into the trends that will shape the next decade. Apple is just one of CML Pro's precious few 'Top Picks.' But, to find the 'next Google' or 'next Apple,' we have to get ahead of the curve. This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have.

Each company in our 'Top Picks' is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:

The Internet of Things (IoT) market will be measured in trillions of dollars as of next year. CML Pro has named the top two companies that will benefit. Here's cyber security:

There's just no stopping the growth in the need for cyber security and we are right at the beginning. CML Pro has named the single best cyber security stock to benefit from this theme.

These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.

Thanks for reading, friends.

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