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Reuters reported last week that top media and cable company stocks dipped after Credit Suisse downgraded shares of Disney, Viacom, News Corp., and Time Warner.
At the same time, Credit Suisse analysts raised their price targets for Netflix shares from US$90 to US$140.
The reason for the re-evaluation:
Credit Suisse anticipates that more young Americans will elect to drop their cable TV provider and replace it with one of the services that delivers video over the Web, such as Netflix, Apple TV, and the upcoming Google TV.
That will prompt the cable companies to reduce their fees to TV networks and Hollywood studios.
Research that sustained the decision, showed:
Credit Suisse's moves yesterday were due to survey results conducted by the financial services company. Almost 30 percent of Netflix subscribers between the ages of 25 and 34 now watch Netflix instead of cable or satellite, Credit Suisse reported.
Nearly a third of the service's users between 18 and 24-years old have dumped pay TV in favor of Netflix.
Just as the ZDNet article rightly suggests, it is time for A la Carte channels for cable companies.
New value creation is needed within the boundaries of the cable.
On-demand and time-shifted already provide and are adapted to this need of customers, in order not to lose, cable companies must find solutions which fulfil this need.