Entertainment companies that got a boost from consumers stuck at home during the Covid-19 pandemic face a “digital attention recession” this year as vaccines are distributed and the economy reopens, a Wall Street analyst said Thursday. The trend is negative for Netflix stock and others, she said.
“As the global economy reopens, we forecast a cyclical bounce out of digital choices and into time spent in physical venues such as cinemas, live sports, theater, music festivals, restaurants, stores, etc.,” Needham analyst Laura Martin said in a note to clients. “Since consumer time is fixed, we forecast a digital attention recession over the next 12-18 months, as the physical world cannibalizes time spent and monetization from the digital world.”
Martin predicts that consumer time spent on digital activities will dip 15% over the next year to 18 months. But some areas will be impacted more than others, she said.
“We believe the biggest losers of attention hours will be console and PC video game play and viewing, followed by OTT (over-the-top) streaming apps that are anchored to the home, such as (Amazon) Prime Video, YouTube, Netflix (NFLX), Roku (ROKU), etc.,” Martin said. “We expect these categories of digital media to fall by more than the 15% average decline in time spent.”
Netflix Stock Faces Heightened Churn Risk
Netflix stock faces pressure from higher churn among users during the reopening of the economy, Martin said.
Netflix stock has been consolidating for the past 11 weeks at a buy point of 593.39, according to IBD MarketSmith charts. In premarket trading on the stock market today, Netflix stock rose 0.9%, near 551.70.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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