tech investment alternate entertainment

Today’s consumer spending habits on media have become more diversified. Rather than sticking with cable, consumers are turning to online media to add additional viewing options to their portfolio of available media. More and more people have even become “cord cutters” – getting rid of their cable TV subscriptions in order to make use of alternative forms of entertainment.

This decrease in cable users has become all too apparent in recent months. 2013 Q1 saw the first-ever 12-month loss of cable subscribers, an industry first. The industry lost 80,000 subscribers from April 2012 through March 2013. Satellite television companies are also feeling the pinch. In just two years, DirecTV (Nasdaq:DTV) went from gaining 184,000 new subscribers in Q1 (2011) to gaining just 21,000 new subscribers in Q1 this year. DISH Network Corporation (Nasdaq:DISH) went from 104,000 new subscribers in Q1 of 2012 to just 36,000 new subscribers in Q1 of 2013. According to an article at GigaOm, “That’s a sign that people aren’t just looking for a cheaper pay TV option anymore, but actually want to get rid of the traditional pay TV bundle altogether.”

Of course, what’s bad for cable and satellite companies is great for streaming services and other online aspects of the media telecommunications industry. For example, Hauppauge Digital Inc. (Nasdaq:HAUP), based in Hauppauge, NY, manufactures digital television products for personal computers and other devices. Their WinTV-HVR-950Q portable USB TV tuner allows consumers to watch analog and digital TV on a computer or a laptop. Cord cutters can use this type of technology to watch free broadcast television on their computer. Hauppauge also manufactures the HD PVR 2 Gaming Edition, which allows users to record video game sessions from their gaming consoles, creating an alternate form of entertainment beyond the confines of cable television. HAUP closed June 20 at $0.714 up $.014 for the day, with a market cap of $7.23 million. Its 52-week trading range is $0.64 – 1.55. Inc*. (OTCBB:VCST) also known as ViewCast Corporation, located in Plano, TX creates video streaming hardware and software, allowing users to create and stream media to the Internet. The company’s Niagara Pro II gives end users the capability to broadcast their events on the Internet as a live stream or an on-demand broadcast. They also offer mobile media streaming solutions, which taps into the growth of smartphones and other mobile devices as bandwidth allocation issues are resolved. On June 18th, ViewCast named David Brandenburg CEO of the company, replacing John Hammock, who will be leading ViewCast’s new global accounts initiative. VCST closed June 20 at $0.0597, up $0.041 for the day, with a market cap of $3.72 million. Its 52-week trading range is $0.04 – 0.16.

Live streaming, of course, extends beyond entertainment and into the corporate world. Corporate live streaming has become a widely accepted way to hold events in multiple locations and offer decentralized training sessions. One company that’s tapping into this market is Onstream Media Corporation (OTCMKTS:ONSM), based in Pompano Beach, FL. While their webcasting tools are more corporate than consumer-oriented, they prove that livestreaming has a life outside of the entertainment industry. Events like webinars allow end users to participate in training events both in real time and on-demand, perhaps even outside of the office environment. ONSM closed June 21 at $0.28, down $0.02 for the day, with a market cap of $4.51 million. Its 52-week trading range is $0.15 – 0.81.

As more consumers become oriented toward alternate forms of entertainment, including live streaming, on-demand online broadcasts and events like webinars, they may become more and more likely to “cut the cord.” Savvy tech investment now in companies that offer entertainment or education beyond traditional media mechanisms may be well rewarded in the future.

* Denotes client of Allen & Caron, Inc., publisher of this blog.

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