Netflix content acquisition costs to soar in 2012
Pay-TV operators may glimpse a glimmer of light at the end of the tunnel as they struggle to retain subscribers, and, for once, it's not the Netflix train bearing down on them.
Netflix, often blamed for cable operators' steady subscriber losses and viewed as a threat by IPTV operators, is looking at some hefty content cost increases in the next two years, according to Michael Pachter, an analyst at Wedbush Securities.
Pachter told CNN that Netflix's content costs could balloon from $180 million in 2010 to $1.98 billion in 2012.
"Netflix has another year or two on most of these contracts, and then the game completely changes," Pachter said. "The content owners realize they can't give Netflix all the leverage," he continued. "Netflix had the power when they were the only bidder. But you don't have as much leverage when you suddenly have competition."
The rising costs of content acquisition might be one of the reasons Netflix reportedly has stepped back from pursuing Hulu. The site, owned by News Corp., Disney and Comcast's NBCUniversal was put up for sale earlier this month.
- see this CNNMoney article
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