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Streaming Wars Get Hot for Disney, Netflix, Roku and The Trade Desk

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  • (0:45) - Trade Desk Runs Box Office for the Streaming Cage Match
  • (6:10) - Binge Watching: The Behavioral Risks
  • (14:30) - Will Netflix Be Forced to Adopt Ad-Supported Platform?
  • (18:00) - Disney+ Storms the Battlefield
  • (22:15) - Amazon Prime & Apple TV: Ringside Seats and Lots of Popcorn
  • (28:40) - Is Comcast’s Free Box A Roku Killer?
  • (34:00) - Episode Roundup: [email protected]

Welcome back to Mind Over Money. I'm Kevin Cook, your field guide and story teller for the fascinating arena of behavioral economics.

On November 7, The Trade Desk (TTD - Free Report) delivered a quarterly report that saw 38% revenue growth as the company provides a revolutionary digital advertising platform for agencies and brands across the web and connected TV (CTV).

Since then shares are up 16% (as of Tuesday's close) because the growth trajectory was confirmed on the back of significant partnerships with Amazon (AMZN - Free Report) , Disney (DIS - Free Report) , and Roku (ROKU - Free Report) .

The Trade Desk model is centered around advertisers using a data-driven approach to targeting audiences and setting up automated programs to buy ad space according to their parameters, including elements like frequency, location, spend, and real-time optimization.

This "programmatic" model can see thousands of ad auctions take place every minute around the world as agency and brand "ad algos" compete for precision exposure to their messages.

TTD CEO Jeff Green opened the conference call with these remarks...

"Just so you have a frame of reference for that [38%] growth, remember that Magna Global estimates the programmatic advertising market is growing at around 20% this year. And the overall advertising industry is growing at 4% according to IDC. So in the fastest-growing segment of an industry that is expected to reach a TAM of $1 trillion in the next decade, we are significantly outperforming.

"In fact, we are once again growing at about double the pace of the industry. Our outpaced growth and market share gain are the result of investments we've made in key channels and markets. It's also because of our commitment to objectivity and independence. And it's the work we do across the industry with partners and standard bodies to make this an industry that advertisers and content providers trust."

Connected-TV Gives Ad Buyers Data They Never Had

For any investor interested in this new advertising model that will continue to gain share from the digital giants Google and Facebook, I recommend reading Green's 3700-word opening "manifesto" on the company conference call. It is truly an education in all things streaming.

But since I don't watch that much TV and don't have multiple streaming subscriptions, I invited my colleague Ben Rains on the podcast to help me sort out the jungle of offerings and competitive trends.

And we just happened to have this chat on the launch day for Disney Plus, the entertainment giant's $7-a-month streaming service for almost everything it creates.

Ben and I, with the help of further commentary from Jeff Green, discuss the players and the probabilities that any one of them will fail, or reign supreme.

For instance, how can Netflix (NFLX - Free Report) continue to invest so heavily in content -- without accepting advertising -- when it's now facing armies of libraries from AT&T/HBO (T - Free Report) , Comcast/NBCUniversal (CMCSA - Free Report) , Disney, and even Amazon?

I always used to think that Netflix had pricing power for its great content and could easily charge $20 per month. But that idea fell into jeopardy when Apple TV (AAPL - Free Report) rolled onto the battlefield at $4.99.

And what about Netflix's "stranger thing" of just dropping an entire season of a new show all at once for consumers to binge watch?

Since my focus in the Mind Over Money podcast is all about behavioral economics, I'm all over this.

So tune in to hear my views there and to get Ben's take on why Comcast launching their own magic box wasn't a Roku-killer.

I also explain the AMZN-TTD partnership from two important angles -- why Amazon chose The Trade Desk as a 3rd-party gateway to Fire TV and how TTD is changing the ad game by drastically reducing the potential for data-privacy abuses with their Unified ID solution.

Oh, I almost forgot Spotify (SPOT - Free Report) . I asked Ben to explain what Jeff Green meant in this quote from his conference call manifesto...

"Connected TV is changing all of that as more viewers access TV content via connected devices and smart TVs. And as more content providers build and launch new streaming platforms, advertisers can apply data to their TV campaigns for the first time. It's a game changer. And as I said two years ago, companies like Hulu, AT&T and Spotify were pioneers of this ad-funded streaming revolution. I said that they were what I call tea leaf companies. If you watch what they do, you can predict and know what others are going to do. They developed new TV and audio revenue models. They took strong positions on ad-supported options."

TTD's audio segment was actually the fastest growing in Q3 at 162% as it serves music, digital radio and the rise of podcast channels.

And finally on my rising podcast, we dish on why the whole streaming wars are just a fun walk in the park for Amazon and Apple.

Be sure to catch this episode if you want to understand how The Trade Desk wins, no matter who loses the streaming wars.

Disclosure: I own TTD shares for the Zacks TAZR Trader portfolio.

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