Why Netflix is a much better deal than traditional cable and satellite TV (NFLX)

pulse

July 18, 2017 5:26 PM

UBS analysts found that an average pay-TV package costs over three times as much, per hour of viewing, as Netflix.

Netflix's "Glow."

On Monday, Netflix revealed that it had added over five million new subscribers last quarter, blowing past its own estimates.

Part of the reason people keep signing up is that Netflix is still a really, really good deal compared to traditional pay TV.

How much of a better deal?

In a recent report, UBS analysts found that an average pay-TV package costs over three times as much, per hour of viewing, as Netflix.

And since 2013, it's only been getting worse for cable and satellite customers. The cost of traditional packages per-hour has risen from $0.35 to $0.42, while the cost of Netflix remains about the same at $0.10.

It's quite impressive that Netflix's rate is so low, considering it frequently turns out high-quality original series and movies, with big stars attached including "House of Cards," "Stranger Things," "Okja," and "To the Bone."

These aren't cheap, with Netflix spending $6 billion on content in 2017. But Netflix's thesis has been that it can grow big enough, especially internationally, to be able to keep costs down (per subscriber).

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