Streaming
The rise of streaming services over the past 10 years has radically changed how we consume television and movies. Lest we forget, there was once a time not so long ago when we had to make sure we were in front of our television set at a designated time in order to enjoy an episode of our favorite program. If you were the poor soul who missed the show, you would have to go around with your fingers in your ears as everyone around you discussed it until you had a chance to watch it when it re-aired later in the week.
With the steady increase in internet access and speed over the past 10+ years, we gained the remarkable ability to instantly stream a vast library of television and movies at any time from anywhere and from a variety of devices. Pioneering companies like Netflix recognized the transformative potential of streaming content early on; so early on, in fact, that they were widely mocked by the established entertainment industry not long before they utterly change it.
In one particularly ironic moment from the early 2000s, a former Netflix executive recalled how Blockbuster executives turned down their offer to sell the fledgling startup by laughing them out of the office.
Netflix is undisputedly the biggest name in the streaming game, but their competition is starting to get serious, leading to a showdown that some are calling the “streaming wars.” Heavy hitters in the form of traditional cable companies and content creators have finally caught on that the future of entertainment is streaming, and they have been working furiously to catch up with more established streaming platforms like Netflix, Hulu, and YouTube.
After years of work and months of hype, these heavy hitters are finally ready to debut what they’ve been working on. Apple launched its streaming service, Apple+, on November 1, 2019, Disney launched Disney+ on November 12, 2019, and HBO Max (Warner Media Entertainment) and Peacock (NBCUniversal) are slated for launch in early 2020.
These launches coincide with news from the Motion Picture Association of America that the number of streaming subscribers worldwide (613 million) has surpassed the number of cable subscribers (556 million) for the first time. The new streaming giants are going to slug it out in the coming years, competing for subscribers with archive depth and quality, as well as the allure of original content. Netflix has demonstrated time and again that a winning streaming formula is one in which viewers come to binge-watch old favorites, like The Office, and stay to nibble on attractive new offerings, like The Crown.
Streaming services have already fundamentally changed how we enjoy television and movies, and continued innovation is going to present savvy investors with incredible opportunities as the industry enters a period of extraordinary growth and upheaval.
For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.
What Is Streaming?
According to PCMag, a streaming service is defined as: “An online provider of entertainment (music, movies, etc.) that delivers the content via an Internet connection to the subscriber’s computer, TV or mobile device.”
The service that companies like Netflix provide is referred to as Subscription Video on Demand, or SVOD. These companies generate revenue from monthly subscription fees instead of from advertising or pay-per-view transactions. Other companies (such as Hulu) use a tiered pricing structure in which lower monthly fees are offered in exchange for advertising in the form of commercials.
Streaming service companies depend on reliable, high-speed internet performance in order to deliver quality products to their customers — a fact so integral to Netflix’s bottom-line that the company now measures and publishes the internet speeds of internet service providers responsible for streaming Netflix content.
Why Invest in Streaming?
According to a May 2019 eMarketer report, the top U.S. streaming services companies generated about $19.9 billion in subscription revenues in 2018, while subscription revenues in 2017 totaled about $14.9 billion.
For its part, Netflix earned three consecutive 30% year-over-year revenue increases between 2016 and 2018, and looks to be on track for a fourth. The company’s share price hovered around $50 in January 2015, and by November 2019, had soared to about $315 per share.
It is much too soon to tell how things are going to shake out in the streaming wars to come, though some analysts believe that Netflix may be in real trouble as other serious competitors step in to take a bite out of the streaming market. Others point to the fact that Netflix spent $12 billion creating original content in 2019, has 158 million subscribers, and has, by far, the largest content archive of any streaming service.
According to a September 2019 Digital TV Research study, the number of subscriptions to streaming services companies is projected to increase by 91% – or 462 million subscriptions – between 2018 and 2024. It is important to note that much of this growth is expected to occur internationally (i.e., outside of the U.S.), and international growth has been a cornerstone of Netflix’s success thus far (62% of Netflix’s subscribers live outside the U.S.).
Other streaming services have a lot of work ahead of them in order to match Netflix’s international success, which includes overcoming complex regulatory and content requirements.
During the seven-year period between 2018 and 2024, Netflix’s revenue is projected to more than double from $15 billion in 2018 to $35 billion in 2024, while revenue from Disney+ is projected to hit $7.4 billion by 2024.
While it is too soon to say how the streaming wars are going to turn out in the long-run, it does seem likely that streaming services as a sector will remain a dynamic, high-growth space in which well-placed investments are likely to do well.
How to Invest in Streaming
However, as the full landscape of streaming entertainment is still shaking out, investing directly in these companies can be risky. Rather, there are a number of funds and ETFs that give investors access to this asset class with more diversification. A search on Magnifi suggests that there are a number of other ways to profit from streaming as a whole.
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The information and data are as of the December 27, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Precision Agriculture
The world is facing a food crisis. Not in some distant future, but today, as a growing global population and rising quality of life are demanding more and more production every year in order to feed all of humanity.
According to the United Nations, the global population is on track to increase from 7.3 billion in 2015 to nearly 10 billion by 2050, requiring that food production must double worldwide in that time to keep up with demand and combat hunger, which today impacts more than 1 billion people worldwide. This fact is the result of decades of insufficient investment in agriculture and food security, leaving millions at risk due to rising food prices, economic swings and climate change.
[Save the world while feeding the world: Investing in Organic Agriculture]
In order to achieve true food security in the world, it’s time to start investing in agricultural research, natural resources, local infrastructure and more, per Korea’s UN representative Park In-kook. “Food prices, already high and volatile, could spike again as droughts, floods and other climate-related events affected harvests, and States must develop responses for both the short-term and the medium-term. Agriculture had to adapt to changing weather patterns caused by climate change, and social protection and safety nets had to be strengthened to ensure adequate access to food for those in need.”
And it’s not just any food that’s needed to solve these problems, either. Rising incomes and quality of life worldwide also mean increased calls for proteins, sustainable foods, organics and other nutritious, high quality options.
For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.
What Is Precision Agriculture?
At a high level, so-called precision agriculture is simply “the application of new technologies to agriculture. It involves using innovations such as Big Data, GPS and more to increase crop yields and profitability while lowering the levels of traditional inputs needed to grow crops (land, water, fertilizer, herbicides and insecticides).”
It’s all about using less and growing more.
According to Grand View Research: Precision farming, also known as site-specific crop management or satellite farming, is a farm management concept that uses information technology to ensure optimum health and productivity of crops. The precision farming technique largely depends on specialized equipment such as sensing devices, antennas and access points, and automation and control system. It also involves maintenance services and managed services. Additionally, it incorporates a broad range of technologies such as bio-engineering, robotics and automation, imagery and sensors, and big data.
For example, a farmer outfitted with a Big Data analytics platform and a tracking device on their tractor could precisely analyze both when to plant certain crops and how to lay out their fields for maximum production. The system could also manage the application of fertilizers for best effect and tell the farmer when to water and for how long. All of these tools would help increase the amount of food the farm is able to produce while simultaneously lowering the farmer’s costs associated with fertilizers (inputs), fuel and time spent managing their operation.
This type of data can also be used to monitor and optimize a farm for changing weather conditions, soil characteristics, pest problems and more, guiding the farmer’s day-to-day management decisions or taking them entirely off of their shoulders.
In addition to Big Data, as described above, some of the applications for precision agriculture currently under development include:
- Robotics: Farming is traditionally a labor-intensive, time-consuming line of work. Farmers are famous for their long hours, starting early in the morning, and typically can’t even get away much during the year given all of their responsibilities, from planting to harvesting and much more. Plus, much of the labor force that the agriculture industry relies on is temporary, moving from job to job during the season. Changes to immigration laws, demands for higher pay and more have made hiring a challenge for farms of all types. That’s why robots have shown so much promise in the field. Imagine the convenience of a robot picker that can go out into the field at all hours, informed of the optimal picking time by local data, and manage the entire harvest by itself while the farmer and their crew sleeps. The same applies to specialty robots that can precisely apply fertilizers exactly where and when it’s needed or monitor and empty pest traps automatically.
- Drones: The FAA is currently reviewing new rules that would enable agriculture operators to use drone to monitor and oversee their crops, delivering eye-in-the-sky functionality that doesn’t truly exist in the industry. For farmers, this means the potential to manage vast tracks of land, including both farms and ranches, without ever even having to drive out to the field. Instead, they could keep an eye on everything from the air conditioned comfort of their home or office. The same goes for fertilizer application and other real-world tasks. This would boost farm efficiency and help drive down costs by eliminating the need for costly, in person oversight work.
Why Invest in Precision Agriculture?
Simply put, the agriculture industry is well behind the times when it comes to the use of technology. Farming is a very traditional industry that has functioned well for generations, producing enough food to keep up with demand while also providing a living for the farmers themselves.
But the growing world population and emerging risks of climate change are changing the math behind agriculture. Efficiency and scale are needed now like never before.
Enter the power of technology to help make this happen.
And it has created a growing market of providers at the same time. According to Grand View Research, the market for precision agriculture companies is expected to reach $10.23 billion by 2025, racking up a compound annual growth rate of more than 14% in that time.
Major factors driving this growth includes farm mechanization, rising labor costs, population, smart farming techniques, and government initiatives to adopt modern agricultural techniques.
Per Market and Markets: Precision farming is gaining tremendous popularity among farmers due to the increasing need for optimum crop production with limited available resources. Further, the changing weather patterns due to increasing global warming have impelled the adoption of advanced farming technologies to enhance farm productivity and crop yield. Precision farming has the potential to transform the agricultural sector, making traditional farming activity more efficient and predictable. Increasing global food demand, extended profitability and crop yield, and crop health monitoring for higher yield production are the major factors fueling the growth of the precision farming market. Also, government initiatives in many countries are helping farmers to use optimized agricultural and technological tools to improve their production levels.
How to Invest in Precision Agriculture
Of course, as an emerging and fast-growing sector, investing directly in precision agriculture companies can be risky and many are still private. A search on Magnifi suggests that there are a number of different ways for investors to get involved in precision agriculture without opening up their portfolios to undo concentrated risk in this new and growing industry.
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The information and data are as of the December 18, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Solar Energy
As the 2010s drew to a close, a report published by the World Meteorological Association (WMO) issued the following stark assessment of the current global climate situation: “The year 2019 concludes a decade of exceptional global heat, retreating ice and record sea levels driven by greenhouse gases from human activities. Average temperatures for the five-year (2015-2019) and ten-year (2010-2019) periods are almost certain to be the highest on record. 2019 is on course to be the second or third warmest year on record.”
The report outlines the increasingly frightening consequences of global climate change, including warming ocean temperatures, deepening droughts, and sweltering heatwaves.
WMO Secretary-General Petteri Taalas summed up the gravity of the situation: “If we do not take urgent climate action now, then we are heading for a temperature increase of more than 3°C by the end of the century, with ever more harmful impacts on human well-being.”
Urgent climate action involves moving away from fossil fuels and toward renewable energy. This transition has been underway for years, and though there are positive signs that things are perhaps beginning to move in the right direction (global carbon emissions are growing at a slower pace, for instance), it has not been enough to adequately address the overall increase in global energy demand.
According to the Executive Summary of the UN’s recently published Emissions Gap Report 2019, “The summary findings are bleak. Countries collectively failed to stop the growth in global GHG emissions, meaning that deeper and faster cuts are now required.”
In order to achieve these critical emission cuts, renewable energy will need to replace fossil fuels as humanity’s primary energy source in the coming decade. One sector that has already made remarkable progress on this front, and that is poised for even greater progress in the coming decade, is that of solar energy.
Solar energy has become a serious global energy contender over the past decade as solar technology has become more efficient and affordable. According to the UN, global solar capacity increased from 25 gigawatts in 2009 to 663 gigawatts in 2019. This increase in installed capacity was greater than any other generation technology, fossil fuel or otherwise, yet solar energy still has tremendous room for growth.
In the U.S., for instance, solar energy accounted for only 1.6% of the total electricity budget in 2018, and all renewable energy sources combined accounted for 17% of the total. As policymakers and the public come to terms with the fact that rapid and dramatic cuts to carbon emissions need to be made to lessen the blow of climate change’s fury, the solar energy sector is extremely well-positioned to play a critical role in meeting the energy demand as renewable energy replaces fossil fuels.
For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.
What Is Solar Energy?
Solar energy is energy that is generated from the sun and converted into thermal or electrical energy.
There are three primary ways to generate solar energy: photovoltaics, solar thermal, and concentrated solar power.
- Photovoltaics directly convert sunlight into electricity by harnessing the electrical current produced when semiconducting materials are exposed to sunlight. Solar panels on the roof of a home or in an array on a satellite are examples of photovoltaics.
- Solar thermal technology works by absorbing heat from sunlight and using it to warm air, water, or other materials. A roof-mounted solar water heater is an example of solar thermal technology.
- Concentrated solar power works by using mirrors spread over a large area to concentrate the sun’s rays to one small point in which water is heated to steam to drive a turbine. If you fly from Las Vegas to Los Angeles and look out your window as you head southwest, you will likely spot the intense glow of the Ivanpah Solar Power Facility in the desert below you. The facility is one of the largest of its kind in the world, and according to the facility’s owner, BrightSource Energy, “the electricity generated by all three plants is enough to serve more than 140,000 homes in California during the peak hours of the day.”
Why Invest in Solar Energy?
The most compelling reason to invest in the solar energy sector comes down to the simple fact that renewable energy is actively replacing fossil fuels as the dominant global energy source. This replacement is likely to accelerate as energy demand increases and as the public demands a faster transition and a more significant commitment to clean energy.
Solar is well-positioned to capitalize on the rapidly-changing energy landscape because the sector has undergone incredible innovation in recent years.
One recent breakthrough in material science, for instance, boosted the maximum efficiency of a photovoltaic solar cell from 29% to 35%.
Another breakthrough is the development of perovskite, a synthetically manufactured material that is more efficient and cheaper to produce than the silicon in traditional solar cells. Another key reason solar energy is well-positioned for the coming changes in the energy market is cost-competitiveness.
According to a November 2019 piece in Bloomberg: “The levelized cost of any particular energy technology is the break-even price that companies investing in that technology need in order to see a competitive rate of return. In the case of both utility-scale solar and onshore wind power, this rate has dropped to about $40 per megawatt hour — which is lower than the cost of building new power plants that burn natural gas or coal. It’s even close to being competitive with the marginal costs of running the coal and nuclear plants we already have.”
According to market analysis by the International Energy Agency, global renewable energy capacity is expected to grow by 50% between 2019 and 2024, with solar photovoltaics accounting for almost 60% of the total expected growth. Private and public investments in solar energy are rapidly increasing, and the sector’s cost-competitiveness, combined with increased efficiency and the urgency of combating climate change, make solar energy a smart investment for the future.
How to Invest in Solar Energy
Given the volatility of the energy sector, however, investing directly in solar energy-related companies can be risky. A search on Magnifi suggests that there are a number of different ways for investors to get involved in solar without opening up their portfolios to undo concentrated risk in this new and growing sector.
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
This blog is sponsored by Magnifi. The information and data are as of the Dec 12, 2019 (publish date) unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]
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The information and data are as of the May 28, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Cannabis Investing
On New Year’s Day 2014, history was made in Colorado. Hundreds of people lined up in the cold outside dozens of shops across the state, each eagerly waiting to be among the first to legally purchase cannabis for recreational use in the United States.
Voters in Colorado and Washington State approved the sale and use of recreational cannabis during the November 2012 election, and the first legal cannabis sales in Colorado in January 2014 represented the opening of a new, legal market for a product that had historically been exchanged only on the black market.
The creation and subsequent growth of this legal market have been driven by the public’s rapidly evolving views on cannabis. In the U.S., public opinion on the sale and consumption of cannabis have changed dramatically over the past decade. According to the Pew Research Center, only 32% of Americans oppose legalizing cannabis in 2019, while 52% of Americans opposed legalization in 2010. This dramatic shift occurred as the American public became more aware of cannabis’s medical uses, and 91% of Americans now support the legalization of medicinal cannabis.
As of November 2019, medicinal cannabis is legal in 33 states and Washington D.C., and recreational cannabis is legal in 11 states and Washington D.C. Cannabis remains illegal under U.S. federal law, a fact that makes the nascent cannabis industry a unique experiment in U.S. law and capitalism.
As more states legalize cannabis and as more businesses enter the market, the contradictions between state and federal law grow more profound. A cannabis producer, for instance, cannot legally ship their product to a neighboring state, even if it is legal in that state, because of federal interstate commerce law.
Cannabis producers are also largely excluded from utilizing formal banking services, which sets up a dilemma as described thus by the American Bankers Association: “The rift between federal and state law has left banks trapped between their mission to serve the financial needs of their local communities and the threat of federal enforcement action.”
There are signs, however, that the distance between state and federal law on cannabis’ legal status may be shrinking. Several bills are currently being debated in the U.S. House of Representatives that aim to combat the federal vs. state contradictions surrounding cannabis law, and there is growing bipartisanship (a word rarely used to describe the state of Washington these days) on expanding access to medicinal cannabis for veterans. There is still a ways to go before cannabis is fully legalized, but at this point, most people seem to agree it is a question of when instead of if.
For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.
What Is Cannabis?
The word “cannabis” comes from the plant genus Cannabis in the family Cannabaceae, and it generally refers to the medicinal substance produced from plants in the Cannabis genus containing psychoactive chemicals. When ingested or smoked, cannabis can produce an altered mental and physical state, often referred to as feeling “high.”
Though cultivated as a medicinal treatment for several thousand years, cannabis is now being recognized by modern medical professionals for its promise in treating chronic pain, nausea, and PTSD, among many other ailments. It is also commonly used to help cancer patients manage their symptoms.
It is important to note that not all cannabis products contain the psychoactive chemicals that produce a high. CBD (which stands for cannabidiol) is one such product, and it has shown tremendous promise in treating a number of ailments – perhaps most significantly, childhood seizure disorders. Furthermore, recent research has found that in states that legalized medicinal cannabis, the number and rate of opioid prescriptions in the state decreased substantially.
The Market Opportunity in Cannabis
According to projections from The Nielsen Company, cannabis sales in the U.S. are forecast to increase from $8 billion in 2018 to $41 billion by 2025. While these projections are remarkable in their own right, they focus only on projected sales of legal cannabis from licensed sellers.
Despite the wave of legalization sweeping the U.S., there is still a thriving black market for cannabis. In the case of California, the value of cannabis sold on the black market in 2019 is projected to be worth about $8.7 billion, while the state’s legal cannabis sales are expected to reach $3.1 billion.
As more states move to legalize cannabis, and as public opinion continues to move in favor of broader access for medicinal purposes, there is likely to be increasing pressure on state and federal lawmakers to address the economic realities that drive black market cannabis sales. For instance, giving producers the freedom to move their products as dictated by supply and demand would decrease pressure to offload products on the black market, as well as increase overall efficiency, lowering prices and making products more competitive with those on the black market. Several states are already setting the legal groundwork for interstate cannabis imports and exports.
As with any economic experiment, the rise of the legal cannabis industry is going to adjust and correct itself as it matures. In that space, however, there are tremendous opportunities for the savvy investor.
Consider, for a moment, that the legal cannabis industry does not need to invent a new product or market that product to a new group of customers in order to realize enormous growth. With the right economic incentives and regulatory framework, the cannabis industry can harness the existing economic activity of the black market and legally supply customers with a product that is already quite popular and increasingly seen as an effective treatment for various ailments.
It is also worth noting that four out of the five top Democratic candidates for U.S. president in 2020 support full legalization of cannabis.
How to Invest in Cannabis
Despite the legality questions surrounding cannabis as of 2019, there is still a growing market of public companies in the cannabis space that are becoming popular with investors. However, as new companies (in an effectively new industry), investing directly in these companies can be quite risky. Rather, there are a number of funds and ETFs that give investors access to this asset class with more diversification. A search on Magnifi suggests that there are a number of other ways to profit from the growing cannabis industry as a whole.
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The information and data are as of the December 4, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.