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📈 The future of streaming is here & it's free
A collection of our favourite articles from the past week
Equity Mates
June 04, 2023
Today’s email is sponsored by Milford
The Wild West of streaming TV is here and it’s free
There is a new acronym you’re going to be coming across more and more in the world of streaming: FAST. Free, ad-supported, streaming television. A whole new generation of streaming platforms are emerging, many owned by the same companies that operate paid-for streaming services.
There is is Tubi (owned by Fox), Pluto (Paramount), Xumo (Comcast) and Freevee (Amazon). They all offer on-demand libraries of TV shows and movies, and many offer linear live TV channels as well. Rather than paying for a subscription, you just need to watch ads. They are the digital version of free-to-air TV. And they are having a moment.
Take Pluto, which Paramount bought for $340 million in 2019. This FAST platform is seen as a compliment to Paramount’s paid-for streaming service Paramount+. When Paramount+ launches the new season of RuPaul’s Drag Race, Pluto features all previous seasons and the first episode of the new one. For Paramount, it is a way to get people into their content and to try to upsell them to the paid platform.
Pluto and Tubi have both recently reached the viewership numbers to be featured in the Nielsen rating. And as cable TV subscribers keep falling and the cost of streaming services keep rising, expect to see these FAST services continue to build momentum. Turns out the future of TV may end up looking very similar to TV of twenty years ago.
Inside the secretive life-extension clinic
Today, there are more than 50 million people around the world living with dementia. By 2050, it is expected that number will have tripled. The pharmaceutical industry has done plenty to help us slow our physical decline. Slowing our mental decline has proven much tougher.
In fact, research into Alzheimer’s treatments (the most common form of dementia) is known as “the graveyard of drug development”. Billions of dollars have been invested, thousands of clinical trials performed, and we remain a long way from a cure and with only a handful of drugs that will slow its progress.
This article takes us down to Mexico where a new generation of treatments are being trialled. These treatments rely on recent breakthroughs in gene sequencing and editing, and claim that rather than treating dementia directly, they instruct the patient’s brain to create two enzymes - telomerase and Klotho - that play a role in controlling cellular ageing. By boosting the amount of these enzymes, researchers hope they can rejuvenate cells in the brains and in doing so “turning back the clock and erasing age-related conditions such as Alzheimer’s”.
The company behind this trial, BioViva, has a fascinating history. When it was founded in 2015 it was the first company in to the world to try to use gene therapy to reverse ageing. It’s first patient was its founder and CEO, Liz Parrish, who performed a one-person experiment on herself in Bogota, Colombia, far from the oversight of American regulators.
This is a wild story of a company right on the cutting edge of medical technology, but also reads like the latest chapter in a story humans have been writing for thousands of years - searching for the fountain of youth.
Video game industry primer
People are often surprised by just how big the video game industry is. We posted a chart on our Instagram this week that shows how it compares to the global box office. The best year for the movie industry was 2019, when global box office receipts were just shy of $40 billion. Every year, the video game industry brings in more than 4x that - in 2021, it brought in $180 billion.
It’s not just a large industry, it is an incredibly profitable one. If you develop a hit game and find a way to integrate micro transactions - paying for more lives, better weapons, or other helpful features - your one game can generate revenue for decades to come.
As this deep dive on the gaming industry writes, “… business moats in the Big Gaming sector are unbelievably wide. Their micro transaction & loot box mechanics are like cigarettes & Casinos combined… amongst the most lucrative & predictable recurring revenue streams in all of business.”
The biggest challenge for the video game industry is that it is a ‘hit based industry’. The top 10% of games enjoy 90% of the industry’s profits. And games are expensive to develop. So unless you are one of the biggest players in the industry developing a portfolio of new games at any one time, it is an incredibly high risk business.
The gaming industry is now starting to move into the media industry. TV shows like The Last of Us and movies like The Super Mario Bros. Movie are proving that much like the comic book superhero before it, these characters and stories can cross over into mainstream Hollywood success. So expect to see far more video games being turned into traditional entertainment as the video game industry continues to grow.
Sherwin-Williams: Painting the wonder of compounding decade after decade
We love coming across stories of boring stocks with incredible returns. It is a reminder that you don’t always have to chase the latest fad. Sometimes a great paint business is a better option than the latest Artificial Intelligence company.
This deep dive profiles Sherwin-Williams, an American paint manufacturer, that has seen it’s share price grow at an average of 14.4% a year since it listed on the share market in 1968, turning every $1 invested into more than $1,600.
But it hasn’t just been Sherwin-Williams. It seems like paint has been an incredible business for investors. In the past 20 years, the S&P 500 has grown 5x and the NASDAQ 100 has grown 11x. In that same time:
PPG Industries (USA) has grown 8x
Berger Paints (Nigeria) has grown 8x
Sherwin Williams (USA) has grown 34x
Asian Paints (India) has grown 182x
Berger Paints (India) has grown 389x
It seems like around the world, paint has been a great business. This article dives deep into Sherwin-Williams and the broader paint industry to help us understand why.
This article is sponsored by Global X
Three ways to enhance portfolio income with ETFs
For any investment, there are two ways to make money. Firstly, someone buys it for more than you bought it. Secondly, you get paid income while you own it. For the past decade, interest rates have been low and income investors have struggled to find good sources of income. So most investors have focused on the first way to make money. But recently, that has changed.
As interest rates have risen in 2023, so has investor interest in income investing. This article from Global X outlines the three most common strategies for income investing, and the opportunity we have to access those strategies through ETFs.
The article also ends with a list of 7 Global X ETFs that are focused on delivering investors regular income. From high dividend paying stocks to investing in government bonds, investors can set themselves up to receive regular income from the stock market. This article will explain how.