Hatch Weekly: Who needs Friends when you've got Netflix

"Sometimes a loss is the best thing that can happen. It teaches you what you should have done next time." - Snoop Dogg

It’s official: Friends and Netflix (NFLX) are breaking up. This news is almost as bad as Rachel and Ross’ break up, people! After losing The Office, the second most-watched show on Netflix, Netflix is reluctantly parting with its Central Perk buddies at the end of the year.

Yes, it’s true: people are still watching Friends

Friends is the most watched show on Netflix. Seriously. While no one we know will admit to watching it (we know you are), Friends is being scooped up by HBO Max, and Netflix must be freaking out. We have no idea why people aren’t binging on the ridiculous number of new shows and movies Netflix churns out. That millions of people still want to blob out to 236 episodes of Friends, which aired on NBC, from 1994 to 2004, is criminal. Okay, we’re exaggerating, but it’s not a show that dates well.

Here comes the competition

Neither The Office nor Friends are headed to well-known competitors Hulu (DIS) or Amazon Prime (AMZN). The Office is heading to NBCUniversal’s (CMCSA) forthcoming streaming platform, and Friends will be available on WarnerMedia’s (T) HBOMax. If your household has spent years toggling between The Office, Friends, and original content, you’ll need at least three subscriptions by 2021 to keep the peace. But wait, there’s more. Disney+ and Apple (AAPL) will launch their global streaming services later this year. Uh-oh. Netflix plans to hold on to its 148.8 million subscribers by throwing billions of dollars at the gaps left by the departure of these shows. Other than Stranger Things, what Netflix original is anyone watching? Netflix currently has 285 original TV shows in production around the world, but they only have an average lifespan of two seasons, which means the company is missing out on building long-running franchises that keep viewers coming back.

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Put your money where your console is

Remember arcades? Or playing Colecovision until the early hours of the morning in your den, hoping your parents wouldn’t wake up? Am I giving away my age? Well, gamers rejoice: gaming is something to celebrate and potentially profit from.

Gaming with the big guns

Big tech is backing the gaming movement. Microsoft (MSFT), Google (GOOG), and Amazon (AMZN) are getting ready to offer streaming video game platforms, with plans of cashing in on a trend that crowned Netflix king in the entertainment delivery business. With cloud gaming, players can stream games across the internet as easily as you stream your favourite show - aka Friends. Coined the Netflix of gaming, Google’s Stadia is working with game developers to create exclusive content as well as licensing games from Electronic Arts (EA) and Take-Two Interactive (TTWO) for distribution on their platform, expecting to cash in on an industry that’s expected to be worth $180 billion in annual sales over the next year. Google hopes to succeed where others have failed, by leveraging its technical expertise and flexing its size muscles to offer gaming content and features not available elsewhere. Google’s foray into gaming could also lead to more deal-making in the space such as potential acquisitions of game makers as well as lucrative content licensing deals.

When in doubt, ETF it up

Yeah, there’s a fund for that. The biggest gaming fund is the ETFMG Video Game Tech ETF (GAMR), which started in 2016. It has $92 million in assets, and its top 10 holdings include Nintendo, Ubisoft, and Activision Blizzard (ATVI) and Take-Two. According to Morningstar, it gained 10.8% this year through June. Don’t forget about the guys under the hood like chip-makers Nvidia (NVDA) and AMD (AMD). If diversification is your game, the iShares PHLX Semiconductor ETF (SOXX) has $1.5 billion in assets and has gained over 12% in 12 months.

Wall Street is fiiiiiine with Facebook’s $5 billion fine

The Federal Trade Commission has approved a fine of close to $5 billion USD against Facebook (FB). The massive settlement still needs final approval over the next few weeks from the Justice Department but when it goes through, it’ll be the biggest fine to date handed out by the federal government against a technology company. This is the price Facey must pay for mishandling users’ personal information, but investors aren’t phased.

Wall Street is optimistic

On Friday, shares rose to $205.27, the stock’s highest price in the past year. Facebook had over $22 billion in profits last year, and some analysts expect that Facebook will earn more than $35 billion a year by 2021. They also happen to be sitting on more than $40 billion in cash reserves, so what’s $5 billion? No mucho. The biggest cause for optimism is that the regulators stopped short of making any meaningful changes to the way Facebook runs its business.

Advertise machine to keep on churning

Facebook has agreed to more comprehensive oversight of how it handles user data, but none of the conditions imposes strict limitations on the company’s ability to collect and share data with third parties. There's a but. Facebook will still face scrutiny outside of the US, and eventually, US Congress may step in to reform data and advertising rules to keep up with the rest of the world. Europe continues to dole out fines and impose restrictions on big tech companies Amazon, Apple, Facebook, and Google. For instance, last year, the European Union fined Google $1.7 billion for abusing its dominant role in online advertising. Facebook has said that it would welcome additional regulation. LOL.

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