Netflix Inc (NFLX): Cutting the Cable

To expand this a little further, Netflix picked up over 2 million new subscribers during that same quarter when Comcast saw such sharp losses. That brought the company’s subscriber base up to 29 million, with 25.1 million of those subscribers based in the US. The company’s expected to add to that in its Q4 earnings report on Jan. 23 as well, especially in regard to streaming-only subscriptions. With an estimated 25.2 million users that have streaming access, Netflix could potentially have half as many subscribers accessing digital content in the US as there are watching cable by the end of 2013. Amazon and Hulu Plus are both experiencing growth as well; Hulu doubled its customer base in 2012 to cross the 3 million customer mark, and Amazon is doing well enough that it has begun expanding its instant video service for use by its 3 to 5 million Prime members on video game consoles such as the Nintendo Wii.

In the end, the cable companies need to adapt to the changing ways that people get their entertainment. Trying to keep up the current system will result in increased costs, decreased profits, and a dwindling subscription base as more people choose cheaper alternatives that stream movies and TV shows via high-speed Internet connections. Netflix and Amazon are both positioned with strong market share in the digital streaming business, and as more individual stations begin putting their content on existing services or streaming the content themselves, the cable companies will find competition not only from the the big names in streaming but from the very content providers that they’re trying to carry the content of.

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