Netflix is officially more popular than cable, but they’re just getting started


Netflix

It’s hard to believe that cable television still exists in 2017. In a world where you can watch any movie or TV show on your phone, sitting on your couch and waiting for a show to appear seems rather backwards. Nonetheless, millions of people still pay their cable provider absurd amounts each month to watch their favorite shows, ignoring hundreds of other channels in the process.

At the same time, millions of other consumers fled cable TV years ago in favor of on-demand streaming networks. Internet-connected services like Netflix ($NFLX) and Hulu don’t always offer the exact same programming as cable, but their on-demand nature make them a more attractive option for the average consumer. You can avoid commercials, watch on your schedule, and view programs anywhere, all for a fraction of the cost of cable.

As Netflix added millions of streaming users over the years, cable giants didn’t do much to prepare their own competing services. They relied on more of the same, hoping customers would want to watch shows when they air instead of when they appear on Netflix. Now, these same companies have to face the idea that Netflix won’t simply beat their archaic model — they’ve already amassed more subscribers than cable providers.

Netflix has more American subscribers than cable TV providers.

The number of Netflix subscribers finally eclipsed the total number of cable subscribers in the U.S., according to Leichtman Research Group and Statista. There are 48.61 million cable customers in the country, down from 52.6 million at the start of 2012. At the same time, there are 50.85 million Netflix subscribers, up from 23.41 million in 2012. That’s an increase of 27.44 million streaming subscribers in five years, while cable lost close to 4 millions subscribers during the same time.

Cable isn’t going anywhere…for now.

There’s way too much money behind cable TV. Cable-only programs still capture millions of viewers. Advertisers heavily rely on ad spots during important events, and vice versa. Every major sporting league and event relies on the millions/billions received from TV deals, constantly promoting each game or playoff event.

Cable and satellite providers were smart to aid in the launch streaming-only TV services like YouTube TV and Sling. These apps are slightly less expensive than cable, though they still force customers to buy entire blocks of channels they might not watch. Cable’s future success will likely rely on the “unbundling” of channels and selling them piecemeal. The industry, however, is nowhere near ready to offer such products.

Netflix just keeps growing.

Netflix’s attractive, low-cost platform keeps wooing American and international subscribers. The company reached the 100 million subscriber milestone this past April, and adding millions of new subscribers before the company’s next earnings report is more than probable. Though they’re not a direct alternative to cable, as they don’t offer many of the same programs (especially sports), consumers are quickly learning to make do with Netflix’s program offerings instead of cable’s. If Netflix continues to make content deals to air never-before-streamed programs from cable networks, they’ll only entice more customers to join. After all, when you can watch one program now for $50 a month or watch it in several months for $12 a month, would you really spend an extra $38 for near-instant gratification?

Should you invest in Netflix?

$NFLX is up 23.08% since the start of the year and 61.32% since this time last year. This is significantly higher than the market average, and investors are more positive than negative about the company’s stock. In terms of future growth, some investors believe the company will continue to gain more subscribers, much to big cable’s chagrin. Others believe that we’ve reached peak Netflix, and the number of subscribers will grow, but at much slower rate. There’s also the fact that Netflix spends on content also as much as it makes in subscriber fees, which isn’t sustainable in the long-term.

If you think the streaming company will continue to add subscribers at an impressive rate and afford their content spending, you might consider investing in $NFLX. Just be sure to do your research before you invest. This means going over the company’s financial records and listening to what analysts have to say about their upcoming earnings report. If you feel we’ve reached peak Netflix and the company will eventually lose money or subscribers, you could always invest in other streaming services.

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