Within its December quarter earnings comments, Netflix shared something that caught a number of folks off guard. I’m talking about this comment from the company’s latest quarterly investor letter in particular:
Let’s deal with the HBO part of the comment first. HBO has developed a number of great programs over the years ranging from The Sopranos to Game of Thrones to name just a few. The issue with HBO is that to date it has had a very staged schedule for its programming while Netflix is bringing proprietary content to its growing user base across the globe at a far faster rate. So of course, it’s not worried about HBO.
Fortnite is another issue altogether for it is one of the fastest growing video games that span a number of platforms (PC, tablet, smartphone). Unlike HBO, which periodically has compelling content that consumers want to watch, increasingly across the “when I want to watch it” app that is HBO Go, Fortnite with its solo play, team play, and competitive play is a far greater screen time challenger to Netflix. Especially given the younger, male demographic that is its mainstay.
Fortnite is not only winning with players but those who want to watch the top-ranked players and teams. According to data published by Amazon’s Twitch streaming service, there are more than 14,000 Fortnite related channels that average nearly 175,000 viewers and at times up to almost 672,000 viewers. That is a meaningful challenge to screen viewing time.
The rise of Fortnite with those who watch and play it is perhaps one of the most visible signs of what has been a growing market for video games. There have been other including the rise of professional gamers and gaming teams, but it’s the rate of adoption and time spent on Fortnite that is notable.
When we speak of our investment themes, in one form or another we zero in on a change in consumer behavior that directly or indirectly leads companies to change or expand their business models. With Amazon, Microsoft and Google all working on streaming game services, it would appear they too have recognized the changing winds associated with our Digital LIfestyle investing theme.
Netflix raised eyebrows Thursday night when the streaming service said the popular videogame “Fortnite” is more of a competitor than HBO.
Gray Kimbrough has studied what’s called the American Time Use Survey from the Labor Department for what it says about videogame use.
Increased gaming is offset by decreasing time spent watching television, movies and streaming video, he found in a study presented at the American Economic Association annual meeting.
The increased prevalence is, perhaps not surprisingly, focused on young men.
Between 2015 and 2017 for men aged between 21 and 30, time spent on gaming rose to 4 hours from 2.3 hours, while time spent on watching TV, movies or streaming fell to 14.9 hours from 16.9 hours. Young women also are spending more time playing games, though not as much: Their time rose to 1.4 hours from 0.8 hours, while TV, movies and streaming time fell to 13.6 hours from 15.3 hours