Star Trek Discovery

With entertainment rivals AT&T and Disney plan to launch new streaming services in 2019, CBS has emerged as a front-runner among its network peers in direct-to-consumer streaming services by having the best mix in media, according to a recent report by BMO Capital Markets.

CBS All Access and Showtime OTT brought in about $381 million in revenue in fiscal year 2017. BMO predicts that will increase to $1.003 billion in 2020. The investment banking group’s subscriber and revenue growth estimates for the platforms are based on all distribution channels, including app stores, connected TVs, Showtime’s website, and OTT devices and platforms.

CBS subscription apps Showtime OTT and CBS All Access are part of a mix of offerings that also include ET Live, CBSN, CBS Sports HQ, and CBSN Local, which are free and supported by ads.

‘Mix shift in media’

At the heart of BMO’s best mix shift in media thesis are CBS’s subscription direct-to-consumer products for two reasons. The first being that CBS All Access and Showtime OTT address the likely future of media consumption, in which more customers will consume media on the internet rather than through broadcast or traditional multichannel video programming distributors. In addition, these products increase subscription revenue as a percentage of CBS’s total revenue. In 2018, affiliate and subscription fees are estimated to be 26.8% of its total revenue. By 2020, they’re predicted to be 27.4% of total revenue.

“The ‘best mix shift in media’ thesis is anchored by essentially no exposure to the cable bundle, strong retransmission fee growth, inclusion in almost all [virtual multichannel video programming distributor] base tiers, solid sub growth in its DTC products, and growth of owned shows and licensing opportunities,” writes BMO’s Daniel Salmon.

All Access and Showtime OTT

CBS All Access has two domestic tiers. Consumers can choose the version with limited commercials for $5.99 a month or avoid commercials all together for $9.99 a month. All Access brought in $120 million in subscription revenue and $78 million in advertising revenue in 2017. BMO predicts that CBS could see these numbers jump to $483 million by 2020.

All Access could also potentially bring in more revenue in Canada and Australia. International subscribers are about 2% of total subscribers but by 2022 that figure is estimated to climb 13%.

BMO states that an increase in the number of subscribers will be driven by original and new exclusive content such as “Star Trek: Discovery,” “Strange Angel,” and new offerings in 2019 such as “The Twilight Zone.”

Showtime’s subscription service also shows the potential for significant growth. By 2022, the platform could have 9.086 million subscribers, a 29% increase from 3Q18, the bank predicts.

BMO Capital Markets gives CBS its only outperform rating for an entertainment stock. If a merger with Viacom were to occur that would impact the investment banking group’s analysis of CBS’s financial outlook through 2020.

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.

More from Sibile:

Sean Hannity, Tucker Carlson lead Fox News to November ratings victory

Christie’s exec on how to be ‘the most powerful woman in the room’

Netflix uses more and more of the world’s internet

Kellyanne Conway: The nation’s opioid epidemic is the ‘crisis next door’

Weed company CEO: The cannabis industry will ‘gladly pay their taxes’