Entertainment consumption shifts to streaming

The surge in streaming music and video is having a major impact on entertainment companies; the Recording Industry Association of America (RIAA) reveals that streaming music overtook digital downloads in the US last year. Meanwhile, in the UK a study by the Broadcasters' Audience Research Board (BARB) shows that around a quarter of UK households now subscribe to streaming video services, such as Netflix. This may be good news for Audioboom, 7digital and InternetQ, the owner of music-streaming service Akazoo.

Music to our ears

The RIAA report estimates that digital sales now account for more than 70 per cent of the US music industry's turnover. That was underpinned by mounting demand for services such as Spotify, Apple Music and Pandora, which drove music-streaming sales up 29 per cent to $2.41bn (£1.71bn) in 2015 - just over a third of total industry turnover. They now exceed revenues from downloaded tracks, which tumbled a tenth to $2.3bn. CD sales also fell 17 per cent, while resurgent demand for records drove vinyl revenues up almost a third.

US listeners are once again paying for music: the number of paying subscribers to streaming services leapt 40 per cent to 10.8m. That drove paid subscription revenues up more than half to $1.2bn, surpassing sales growth of 31 per cent among 'free', advertising-driven streaming services such as YouTube, which is owned by Alphabet (GOOG)

Soaring demand for streaming audio could be good news for Audioboom (BOOM), which provides on-demand spoken word content. It could also buoy InternetQ (INTQ) - owner of music-streaming service Akazoo - as well as 7digital (7DIG), which provides broadcasters, mobile carriers and brands with the technology and music rights to create music-streaming or radio services.

Source: RIAA

Tuning in online

In its first quarterly report on the UK television landscape, BARB delved into the adoption of video streaming services and the potential demise of conventional television. Based on interviews with more than 53,000 people, the group estimates that 24 per cent of UK households subscribed to Netflix, Amazon (AMZN) Instant Video or NOW TV - owned by pay-TV titan Sky (SKY) - in the fourth quarter of 2015. Netflix led the pack with more than 6m subscribers, followed by Amazon with 5m and NOW TV with under 1m.

Source: BARB

The report also highlighted demographic trends. Streaming subscribers tend to be younger, more affluent and live in larger households. They're also more likely to be pay-TV subscribers; that partly reflects deals between Netflix and telecoms providers such as Virgin Media, BT (BT.A) and TalkTalk (TALK). Nonetheless, that may assuage investors' fears that Sky and other pay-TV providers are being displaced by online services: they may be more companions than competitors.