Here's a wake up call for the cable companies.

A new report from Credit Suisse says almost 30% of Netflix subscribers aged 18-24 are using Netflix in lieu of cable or satellite TV. (17% of all users are skipping cable for Netflix.)

The emergence of Netflix, and other internet TV options, led Credit Suisse to downgrade the entire entertainment industry.

"Netflix’s low cost, subscription streaming service (with improving content) is our biggest worry and could become ‘good enough’ for consumers with moderate income and TV usage to use as a substitute for pay TV," says Credit Suisse.

That's might be true, but there's a few caveats:

1. Of course younger people would skip cable. They're busy with school and drinking, so cable isn't that important. Also, they don't have a lot of extra cash laying around to spend on cable. Let's see what happens when they get older.

2. This could be bad news for Netflix. If this trend plays out, it's only going to be more expensive and harder for Netflix to secure deals with major content companies at a reasonable price. The cable companies have a lot of sway over content companies that supply live streaming to Netflix. They might try to block more shows from Netflix. Let's not forget Netflix's most recent deal cost it $1 billion over 5 years.

3. Netflix doesn't truly replace cable. There's nothing you can see on Netflix today that's on cable yesterday. In other words, Netflix already has a big delay in its programming. If you want to watch last night's TV show, or even last month's TV show, Netflix isn't a viable option. For people that actually like TV, Netflix isn't a great option.

(via CNBC)

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