By John Melloy, Executive Producer, Fast Money

An alarming survey by Credit Suisse ( CS) should serve as a wake-up call to the broadcast networks and cable companies, demonstrating that they need to take control of their revenue destiny right now, while they still have some negotiating power.

Analysts there found that 37 percent of Netflix subscribers aged 25 to 34 substitute Netflix ( NFLX) for pay television. Almost 30 percent of users between 18 and 24 are using Netflix's streaming service instead of cable or satellite. The Credit Suisse survey was of about 250 Netflix subscribers.

"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," said Credit Suisse's Spencer Wang and a team of analysts, in a 50-page treatise on the entertainment industry.
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The team downgraded the whole sector to 'underweight' from 'market weight' because of the oncoming ubiquity of high-speed broadband opening the door for these delivery services.

Netflix, Microsoft's ( MSFT) X-Box and Hulu are already here, but Apple's ( AAPL) revamped TV service and Google ( GOOG) TV are coming this year. Amazon ( AMZN) is reportedly working on a subscription service as well.

Shares of Netflix are up more than 150 percent this year. Disney ( DIS), News Corp ( NWS), CBS ( CBS), Comcast ( CMCSA), and Cablevision ( CVC) are all up less than six percent this year or in the red.

"Between cutting back on 'extras' and the fact that a true on-demand situation exists that is also portable via iPad and iPhone, the Netflix story just works," said Jon Najarian, co-founder of "My worry is how long Apple runs with them before deciding to run the same through iTunes and crushes 'em."

Credit Suisse maintained that the content and cable kings are not necessarily overthrown yet. Their survey found that just 17 percent of Netflix subscribers of all ages and incomes are substituting that service for cable.

"In the near term, we submit that Big Media has a small window of opportunity to control its own destiny," said Credit Suisse in the note. "The major U.S. entertainment conglomerates control approximately 70 percent of all TV viewing through its various broadcast, basic cable and premium TV networks and channels. And, content remains the lifeblood for distribution systems."

But with their downgrade, they apparently decided that this is already an investable theme. Not all investors are ready to do the same.

"The analyst's premise is right," said Patty Edwards of Trutina Financial. "But I'm not sure how quickly this is going to eat into profits. People change habits slower than he might think."
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