What coronavirus could mean for Amazon, Netflix, streaming services

March 5, 2020 3:31 PM PT

SAN FRANCISCO — As more consumers isolate themselves at home because of concerns about the new coronavirus, 23-year-old gamer Brian Silva hopes they’ll entertain themselves by watching him online.

The larger the audience he has, the more advertising dollars he’ll earn from his Twitch channel, where he livestreams his “Fortnite” gameplay.

“With coronavirus on the rise, no better time to follow me on Twitch!” Silva said Wednesday on Twitter. “If you have to self quarantine, I’m streaming 5 days a week to keep you entertained,” the Minnesota resident added.

The coronavirus, which has caused 12 U.S. deaths, including one in California, has hurt a wide spectrum of businesses. Airlines have reduced flights, large tech companies canceled conferences and movie theaters have suffered in South Korea and China. But there are a handful of businesses, including ones in home entertainment or food delivery, that may even be helped by the health scare.

JC O’Hara, chief market technician for equity research at trading firm MKM Partners, compiled what he called a “Stay at Home” portfolio of stocks. Among the list of companies that he believed could hold up better against the coronavirus was online retail giant Amazon, streaming service Netflix, food delivery business Grubhub and gaming company Activision Blizzard.

“We tried to identify what products/services/companies would potentially benefit in a world of quarantined individuals,” O’Hara said in a report. “What would people do if stuck inside all day?”

Some stocks of streaming services are performing well in a weak market. On Thursday, Netflix shares slipped 2.9% to $372.78 and Grubhub shares fell 2.2% to $51.62, compared with the S&P 500’s 3.4% decline amid a broad market sell-off.

Netflix declined to comment on whether it is seeing an increase in subscribers or time spent on its platform. Grubhub declined to comment.

Some businesses in the space have already seen an increase in demand.

Instacart, which offers same-day delivery of groceries and other items, said requests for health-related items rose in response to the virus’ spread.

“Over the last few days we’ve seen a surge in customer demand for pantry items such as powdered milk and canned goods, as well as personal-care products like hand sanitizer and vitamins,” the company said.

Some Amazon customers said delivery windows were no longer available for certain products and even California Gov. Gavin Newsom complained about the steep price of hand sanitizer sold on the company’s website. Amazon did not respond to a request for comment.

Meanwhile, John Stankey, AT&T’s chief operating officer and president, in a conference this week acknowledged his TV business could see a boost.

“Maybe if a few more people are going to be staying home, they might find more utility in watching TV for a period of time here that might help us in the short term,” Stankey said. AT&T is launching its HBO Max streaming service in May.

The combination of people not wanting to be near crowds and the allure of an almost infinite amount of programming available through streaming services can be appealing to people who choose to isolate themselves at home, said Robert Thompson, a director for the Bleier Center for Television and Popular Culture at Syracuse University.

“Quarantine and bingeing are actually a match made in some macabre sort of heaven,” Thompson said.

Movies such as the 2011 thriller “Contagion” are gaining newfound popularity. The movie was the 270th most watched film in the Warner Bros. catalog in December, and this year it is the second most watched movie, the company said.

If the coronavirus continues to spread, analysts believe U.S. consumers will adopt behavior similar to that of Chinese consumers. China this year has seen a surge in people downloading apps on their smartphones in such areas as games and entertainment, according to San Francisco mobile data and analytics firm App Annie. Weekly game app downloads on Apple devices last month were up 80% in China, compared with a monthly average of downloads for 2019, the company said.

Already, some Californians like Rohit Kulkarni are changing their routines. Recently the equity analyst decided to play video games with his kids indoors instead of playing outdoor sports such as soccer. If the coronavirus continues to spread, he will probably skip going to the movie theater with the kids and watch a documentary on Netflix instead, said Kulkarni, who lives in San Mateo.

“As you tend to stay at home more, you tend to watch more Netflix, you tend to order food in as there are more options to deliver food at home,” he added.

So far, since the coronavirus fears took hold, box office numbers have been down markedly in certain affected countries, including South Korea, Italy and Japan. Chinese theaters have been shut down for weeks.

Ticket sales in South Korea are down about 70% from what they would normally be at this time of year, according to Bruce Nash, who runs data website The-Numbers.com.

“We’re losing China, we’re seeing a big hole in South Korea, and we’re down a little in Italy and Japan,” Nash said. “And of course, looking forward, we have no idea what’s going to happen. I suspect you’re going to see reductions on a global basis over the next few weeks, and it all depends on how the disease breaks out.”

There’s little indication yet that U.S. consumers are staying home from theaters. However, studios have canceled film premieres, delayed productions and pushed back release dates to respond to the global situation. The newest James Bond movie, “No Time To Die,” was delayed until November, MGM said Wednesday.

Businesses including WarnerMedia, Sony Pictures and Creative Artists Agency have also restricted travel for employees. Culver City-based Sony Pictures on Wednesday confirmed that it has restricted employee travel that is not for production or crucial to business. This includes international and domestic travel, including within the United States.

Apple was among the companies that pulled out of the SXSW conference that was set to begin in Austin, Texas, next week, canceling showings of series “Home” and “Central Park” as well as documentaries “Beastie Boys Story” and “Boys State.” Those programs will be airing on Apple’s streaming service, Apple TV+. Netflix also has withdrawn from the conference.

The silver lining is that Apple TV+ and other new streaming services could see an upswing in home viewing, said Brahm Eiley, president of Victoria, Canada-based Convergence Research Group.

“Ultimately, it could drive more and more people to stay home and to stream,” Eiley said. “It probably will have an impact; the question is how much that impact will really be.”

If the outbreak disrupts releases for only the next few weeks, studios may be able to adapt by shuffling certain films for later in the year, Nash said. However, some have speculated that if theaters are shut down on a larger scale for a long period, studios may consider putting releases out through premium video on demand.

“Overall consumer spending on movies tends to be fairly flat,” Nash said. “If the virus takes $1 billion out of the box office, that billion dollars in consumer spending could shift to streaming services. I think it’s kind of a zero-sum game, unless things get really out of control.”

Times staff writer James Peltz contributed to this report.