Zacks Investment Research | Sep 18, 2019 09:45PM ET
With increasing Internet and smartphone usage, music streaming services offering unlimited and uninterrupted access to high-quality audio files are gaining rapid traction globally.
Further, increasing proliferation of smart speakers and wearables like smartwatch, which can be synchronized with music streaming apps, is driving the demand for such services.
Per a report from ResearchandMarkets, the global music streaming service market is expected to see a CAGR of 16% between 2019 and 2023.
Further, a Statista report shows that this market is expected to generate $11.1 billion revenues in 2019 and the figure is expected to hit $13.1 billion by 2023 at a CAGR of 4.1%.
Amazon’s HD Masterstroke
Given this upbeat scenario, Amazon (NASDAQ:AMZN) recently launched a new version of its music streaming service featuring HD music quality.
Notably, the new service called Amazon Music HD will stream the highest quality audio giving users access to more than 50 million lossless HD songs and millions of songs in Ultra HD across various genres of music.
Further, the service will be compatible with devices such as desktop, selected Echo devices, Fire TV, Fire Tablets and smartphones based on both iOS and Android. The company has made Amazon Music HD compatible with several third-party devices as well in a bid to expand its reach. Notably, the service is currently available in the United States, the U.K., Germany and Japan.
Amazon Music HD is the first of its kind in the music streaming market, which in turn will bolster the e-commerce giant’s presence in the space.
Further, we believe the latest HD move is likely to provide Amazon a competitive edge against other music streaming providers such as Apple (NASDAQ:AAPL) , Alphabet (NASDAQ:GOOGL) , Spotify (NYSE:SPOT) and Sirius XM (NASDAQ:SIRI) since none of them have HD music streaming yet.
Further, expanding global presence of Amazon Music remains a tailwind. Notably, this Zacks Rank #3 (Hold) company has expanded Amazon Music service to more than 40 countries with Brazil being the latest.
Year-to-Date Price Performance
Should Apple & Spotify Worry?
Amazon’s move is expected to threaten the dominance of both Apple and Spotify.
Apple Music, which streams over 50 million songs, thousands of playlists and daily selections from the world’s best music experts, has been gaining momentum on the back of its international presence.
Additionally, the iPhone maker recently rolled out an initiative called Apple Digital Masters, which is aimed at bringing all of the service's highest-quality recordings into a single platform.
Further, the Zacks Rank #3 company is benefiting from strategic partnerships. Its tie-up with Verizon (NYSE:VZ) has made Apple Music available for free to its customers. Further, the service is available on Echo smart speakers owing to Apple’s partnership with Amazon.
Meanwhile, Spotify continues to gain paid subscribers on the back of strong promotions in the United States and Canada. Further, its compatibility with Google smart speakers and robust playlists remain major positives. Further, this Zacks Rank #3 company has a strong conversion rate from free listeners to paid subscribers.
Per Zacks Investment Research
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