Is Netflix Making Cable Obsolete?

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Netflix is poised to take over the entertainment industry, according to the New York Times.

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“Right now, Netflix is a distribution platform, and has very little competition, but that’s changing,” Warren N. Lieberfarb, a consultant who played a critical role in creating the DVD, said to the NY Times.

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Already the number one first-class mail customer in the United States, the announcement of an online streaming only plan has Hollywood worried that going to the movie theater or paying for PPV might become pointless. The company is going to spend more streaming movies online than it is on physical mailing costs for the first time. But, it isn’t like Netflix isn’t getting a break: While typical cable companies pay $4 to $5 a month for services for their customers like Starz, the online video store only pays 15 cents. They’ve cut costs at every corner, which has made them a lucrative business for investors to sink their money in.

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“Though already a significant customer, they’ve grown faster than anyone anticipated and going forward we expect the economics to improve significantly,” John Calkins, executive vice president of digital and commercial innovation at Sony Pictures Home Entertainment said.