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The On-Demand Generation Growth Accelerates – An Investment Theme

The On-Demand generation is a term I coined over a year ago and is a major investment theme we should all be following. If you aren’t familiar with the theme, it is a group of children growing up today in a media landscape that is very different then the generation of yours or mine, or even the Millennial’s. This is a generation of children around the age of 10 or younger using Netflix and YouTube as their primary source of getting their media.

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I learn so much from children ages 7 and 3, many of my best investment ideas have come from watching things they do and how their habits than change my habits.  My kids continue to prove to me just how much the media landscape continues to evolve and how significant this shift will ultimately be. Perhaps more significant than even my original thesis, I wrote for TheStreet.com in April of 2016.

A video generating 20 million views could generate revenue of nearly $100k.

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Early Days

At the time, in my early days of writing, the theme was much smaller. Shows with low budgets were being posted on Alphabet’s ($GOOGL) YouTube, and getting views in the tens of millions, with a couple of million subscribers.

The pace of that growth has accelerated where well-budgeted YouTube shows, such as JoJo, are now getting nearly 400 million views in just a year, while collecting nearly 5 million subscribers, creating well-produced videos. It has become clear, that the video content YouTube continues to improve and again is becoming a primary source of entertainment and media for this younger generation.

The rise of the YouTube family is impressive as well, such as Cole& Sav video’s about their daily lives has grown to nearly 3.7 million subscribers and multiple video’s clocking in at over 25 million views.

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Primary Plays

Companies like Netflix ($NFLX), Alphabet ($GOOGL), and Disney ($DIS) continue to be primary ways to play this trend, as these are major sources of original content. Companies like AT&T ($T), and Verizon ($VZ) continue to be secondary plays, as these are the sources that offer the infrastructure and data needed to deliver the content.  Think content delivery in a 5G world, one in which Verizon just about ready launched in 5 cities.

Secondary Plays

Companies like CBS ($CBS), Viacom ($VIA), and some of the smaller networks continue to be an area of great concern for me. They just do not have the online presence in my experience. They may also suffer because the content production cost for an independent person or family producing content on YouTube is far cheaper than a production studio.

One monetized Video on YouTube could generate nearly $6,000 to $100,000 per year, based on 20 million views, which is mostly pure profit if one is just filming their lives with an iPhone. Based on the number of subscribers, the family show could generate a cost per click that is well above the average range, and likely skews closer to the $100,000 per 20 million views.

24- Hour Days