Streaming entertainment is one of the earliest iterations of a disruptive growth technology, and it’s still rapidly growing. Investors can access that trend with active management advantages with the newly minted Roundhill Streaming Services & Technology ETF (NYSE ARCA: SUBZ).
SUBZ is the fourth exchange traded fund in the Roundhill Investments portfolio, and the first actively managed fund from the issuer.
The ETF “consists of companies from across the globe who are actively involved in the business of streaming. This classification includes (i) companies that operate direct-to-consumer streaming services including video, audio, livestreaming; and (ii) companies that create infrastructure or technology necessary to facilitate streaming,” according to the issuer.
SUBZ Hitting the Market at the Right Time?
SUBZ may have gotten the timing just right. This can be crucial for infant thematic funds.
“As for timing, plenty of cable subscribers were cutting the cord prior to the coronavirus pandemic, but like so many disruptive technologies, the health crisis is speeding the case for streaming. With so many folks forced to quarantine, in-home entertainment became nearly as essential as hand soap and toilet paper. Cable, which often lacks for bespoke options, lost six million households last year,” according to Nasdaq.
Highlighting the allure of SUBZ are data confirming the ongoing decline of linear television.
“Disruptive innovation typically evolves slowly, until it hits a tipping point. Since peaking in 2011, the number of U.S. linear TV households has been declining at an annual rate of 2.1%, a rate that we believe will accelerate to -15% at an annual rate during the next five years,” said ARK Invest analyst Nicholas Grous in a recent report. “Cumulatively, the number of U.S. linear TV households could drop 48% from 86 million as of 2019 to roughly 44 million, a level last seen more than 30 years ago in the late 1980s.”
Streaming is an increasingly global phenomenon. The U.S. represents 54.5% of the fund, China 26.9%, Sweden 5.8%, Japan 5.1%, South Korea 4.7%, and Canada 3%. The bottom line is that plenty of consumers are ditching cable.
“Data from The Trade Desk suggests 27% of Americans will cancel their traditional TV plan this year, a phenomenon known as cord cutting,” says Roundhill. “Goldman Sachs believes 1.2 billion people will be a paid subscriber to an audio streaming service by 2030, compared to 341 million in 2019.”
For more on active strategies, visit our Active ETF Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.