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Netflix Vs. Pay TV

Netflix Vs. Pay TV

A lot of folks in the film business are taking Netflix even more seriously, following its recent licensing deals with Relativity Media and Nu Image, which essentially makes Netflix a new option for first-run movies on your TV. Conventional (read: old school) wisdom had kept most distributors uncertain about Netflix license deals, but the combo of money and eyeballs, has made studios take a second look. The Netflix deal with pay TV channel Epix, further cements the service’s ability to provide more premium content to its subscribers. And, according to a Credit Suisse survey, there is good reason for some cable channels to pay attention:

Analysts there found that 37 percent of Netflix subscribers aged 25 to 34 substitute Netflix for pay television. Almost 30 percent of users between 18 and 24 are using Netflix’s streaming service instead of cable or satellite. The Credit Suisse survey was of about 250 Netflix subscribers.

“Netflix’s low cost, subscription streaming service (with improving content) is our biggest worry and could become ‘good enough’ for consumers with moderate income and TV usage to use as a substitute for pay TV,” said Credit Suisse’s Spencer Wang and a team of analysts, in a 50-page treatise on the entertainment industry.

Credit Suisse maintained that the content and cable kings are not necessarily overthrown yet. Their survey found that just 17 percent of Netflix subscribers of all ages and incomes are substituting that service for cable.

“In the near term, we submit that Big Media has a small window of opportunity to control its own destiny,” said Credit Suisse in the note. “The major U.S. entertainment conglomerates control approximately 70 percent of all TV viewing through its various broadcast, basic cable and premium TV networks and channels. And, content remains the lifeblood for distribution systems.”

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