In its latest teen survey, Piper Sandler takes a closer look at what teens' preferences are when it comes to streaming video and music. The results are pretty much what you'd expect: Netflix (NASDAQ:NFLX) and Spotify (New York Stock Exchange: POINT) are the most popular. But ranking these services by gender and income level (or rather, your parents' income level) gives insight into which ones are best positioned for growth and which can absorb higher subscription costs.
The survey looked at the choices of 6,000 16-year-olds in 47 U.S. states with a median household income of $66,000. The majority of respondents were men (54% vs. 44% women, 2% non-binary), predominantly located in the Southern states (43%), followed by the Midwest (28%), the West (19%). and the Northeast (9%). .
Among streaming services, Netflix is the most popular among teenage girls, who also spend 50% more of their video consumption on the service. But while Netflix (NFLX) dominates among teen viewers, time spent watching Netflix (NFLX) has decreased marginally from last year, while time spent watching amazon Prime (NASDAQ:AMZN) increase.
While Netflix (NFLX) is currently more popular with women, the company appears to be taking steps to close the gap with men with more sports programming, including a recent partnership with WWE. Despite the higher cost to sports, Piper believes this could ultimately serve as a tailwind for the company by attracting more male viewers.
For teens in higher-income households, Prime (AMZN) and Apple TV+ (NASDAQ:AAPL) are the favorites, suggesting that these two services have much more price inelasticity than their peers.
Cable television (CMCSA, CHTR) continues to lose ground in most homes: 45% of teens surveyed do not have cable in their homes, up from 44% a year ago, and 7% of them are expected to Cut the cord in the next 6 months. The survey also found that high-income households take longer to cancel cable subscriptions compared to average-income households, suggesting that the decision to cut the cord depends more on cost savings than viewing preferences.
Comcast (NASDAQ:CMCSA) lost subscribers last quarter and the results spooked investors who saw the drop as cause for concern. But Looking Alpha authors and Wall Street analysts are bullish on the stock and see it as an attractive buy at its current level.
“I'll readily admit losing cable subs in a big headwind,” said Seeking Alpha author Chuck Walston. But Comcast (CMCSA) “has a very strong moat in (broadband), which will likely prevail for the foreseeable future,” Walston added.
As for teens, Comcast (CMCSA) and Charter Communications (NASDAQ:CHTR) are preferred by gamers with broadband speeds that can't be matched by other services like Roku (NASDAQ:ROKU). Comcast (CMCSA) is also investing in technology that will increase upstream capacity to 6 Gbps, 3 times higher than currently.
For music streaming, Spotify (SPOT) is the clear favorite among two-thirds of teens surveyed, and 45% pay for a subscription, down one percentage point from a year ago. Three-quarters of teens pay for more than one music streaming service, with most of their subscription money going to Apple Music (AAPL) and amazon Prime Music (AMZN). This appears to be due to Apple (AAPL) and amazon (AMZN) offering subscription packages, rather than a preference for the music streaming option. Since teens from high-income households are more likely to use and subscribe to Spotify (SPOT), Piper Sandler believes Spotify (SPOT) users could absorb higher prices compared to other music streaming services, including amazon Prime Music (AMZN) and Apple Music (AAPL). with greater capacity to monetize.
Spotify is also a favorite among Seeking Alpha authors, with a majority rating it as a Buy. “I'm optimistic about its growth trajectory and margin expansion in the near future, both from a subscriber and price point of view,” said Seeking Alpha analyst Hunter Wolf Research, while Cavenagh Research gives Spotify a Strong Buy as their main recommendation for a “potentially explosive rally.”
