Square
SQ
eyes business-diversification strategy in a bid to bolster its financial performance in the near term.
This is evident from its latest talks with Jay-Z’s music-streaming service called Tidal. Notably, the service, which offers more than 60 million songs and 250,000 videos, is available in 53 countries.
If the deal acquisition under review happens, Square will get exposure to new growth market. Further, it will expand its service offerings.
Moreover, the move holds growth promise as the music-streaming service market is booming.
The ever-changing landscape of this data-driven world has created a unique niche for music-streaming services.
Growth Opportunities in Music-Streaming Space
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, the increasing proliferation of smart speakers and wearables like smartwatch, which can be synchronized with music streaming apps, is driving the demand for such services.
Further, a Statista report shows that this market is expected to generate $19.7 billion in revenues for2020 and the figure is expected to hit $33.4 billion by 2025, witnessing a CAGR of 11.1%.
Additionally, the user penetration rate in the market is likely to have hit 7.3% in 2020. The figure is expected to reach 11.6% by 2025.
Intensifying Competition
Square’s foray into this promising market peps up the music streaming war against companies like
Spotify
SPOT
,
Amazon
AMZN
and
Alphabet
’s
GOOGL
Google, which are notable players of the market.
Spotify continues to witness solid momentum among paid subscribers on the back of strong promotions. Further, its compatibility with Google smart speakers and robust playlists remain major positives.
Then again, Amazon is constantly gaining steam on the heels of Amazon Music Unlimited and Amazon Music HD. The company offers tens of millions of songs, and thousands of expert-programmed playlists and stations.
Google has been making advances in this market over the past few years. The company’s latest on-demand music streaming service called YouTube Music is aiding its momentum in the market by leveraging the popularity of YouTube and the capabilities of its machine-learning techniques.
Currently, Square carries a Zacks Rank #3 (Hold). You can see
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