It's a question everyone asks and no one knows how to answer: Which media companies will survive as online video disrupts the pay-TV model that has sustained large media companies for more than 35 years?
With the future of media particularly unclear, investors have the jitters.
CBS (CBS) loves to tout itself as "the most-watched network" but its shares have dropped 22% this year. Shares of Discovery Communications (DISCA) , which has aggressively expanded into Europe, have fallen 38% since the beginning of 2014. Shares of Scripps Networks Interactive (SNI) , owner of the mainstream channels HGTV and Food Network, has tumbled 26% this year.
This much is certain: People are consuming more video, and even a lot audio -- what we used to refer to as radio. The numbers don't lie. According to Nielsen, more than 120 million American adults are using some sort of media at peak consumption hours, about 9 p.m. on a weekday.
"People are watching more and more video all the time," said Matthew Harrigan, who covers media stocks for Wunderlich Securities. "Internet companies still view traditional television as a dominant medium."
At that 9 p.m. peak hour, television remains the overwhelming media destination with about 93 million viewers. That's about six times the audience of smartphones at that time.
That's not to say mobile growth isn't explosive. It is. At various points during the day, smartphones are No. 2 in terms of total users, reaching a high of about 16 million in the 5 p.m. hour. In those hours, smartphones surpass both radio and personal computers. Because smartphones aren't close to being saturated, expect that number to rise.
When investors try to analyze which companies might succeed there are some other interesting trends to keep in mind. For instance, despite all the different networks and ways to watch, most consumers ignore the great majority of viewing options.
Right now it's not simply about fewer people watching the traditional networks -- CBS, NBC, Fox and ABC. It's that despite hundreds of options, consumers are actually utilizing just a select few. It's a wider net than the three networks, but it's still somewhat surprisingly concentrated.
Though the number of online video sites has proliferated in recent years, the largest source of attention remain stayed concentrated: Disney's (DIS) ABC, CBS , Comcast's (CMCSA) NBCUniversal and 21st Century Fox (FOX) are joined by Netflix (NFLX) , Hulu (jointly owned by Disney, Fox and NBCUniversal), Amazon's (AMZN) Prime, Facebook (FB) and Google's (GOOG) YouTube
"People have been watching eight to 10 channels for a long time now," Harrigan said. "Content is what differentiates."
Netflix brilliantly went into original content to grow subscriptions. Despite a recent slowdown, the strategy has been hugely successful. Netflix is now known for smart, scripted television. The identity is almost as important as the distribution model, and that makes business riskier for other brands.
"The networks that re-package programming are vulnerable (right now)," Harrigan added. "Not to pick on something like [NBCUniversal's] USA Network, but a channel like that probably doesn't break through as much because it is not genre specific."
When assessing success in the present and near future, two things are essential: An identifiable brand with unique content coupled with dynamic delivery methods.
Ultimately, we may not know exactly who the winners will be, but we do know is that the front-runners of today could end up the laggards of tomorrow.
"Things have changed quickly over the last five years," Harrigan said. "And they will change even quicker in the next five."
That's both a warning and an invitation to CBS, Discovery and Scripps Networks.