What that means is that Netflix is competing with the premium cable channels, not basic cable (ad-supported channels such as ESPN).
Netflix now estimates it will expand to as many as 22.8 million subscribers in the coming quarter, a possible uptick of 14 percent. Meanwhile, the subscriber base for HBO, which ended its last quarter with 28.55 million subscribers, fell to its lowest levels in four years, and dropped 1.9 percent from the last quarter.
Netflix may someday more directly threaten basic cable service. For the moment, it seems to be doing just fine cannibalizing premium TV networks. In response, cable and other networks will have to start cannibalizing their own premium channels as well, since video-on-demand essentially replicates the Netflix streaming service.
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