HBO Competition 'Will Drive Us Both to Be Better,' Netflix Tells Its Shareholders
Netflix for three years has been predicting that HBO "would be our primary long-term competitor, particularly for content," said CEO Reed Hastings and Chief Financial Officer David Wells Wednesday in the company’s Q3 letter to shareholders (http://bit.ly/1oaQFoD). That referred to the development hours earlier, when HBO CEO Richard Plepler used Time Warner’s investor meeting in New York to drop the news that the company will offer a "stand-alone HBO streaming service" in 2015.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Of the estimated 10 million U.S. homes that receive their TV exclusively through broadband, "that is a large and growing opportunity that should no longer be left untapped," Plepler said, according to a transcript released by Time Warner (http://bit.ly/1qwE4Ya). "It is time to remove all barriers to those who want HBO. So, in 2015, we will launch a stand-alone, over-the-top, HBO service in the United States. We will work with our current partners. And, we will explore models with new partners. All in, there are 80 million homes that do not have HBO and we will use all means at our disposal to go after them."
Netflix welcomes the competition with HBO because it "will drive us both to be better," wrote Hastings and Wells. "It was inevitable and sensible that they would eventually offer their service as a standalone application. Many people will subscribe to both Netflix and HBO since we have different shows, so we think it is likely we both prosper as consumers move to Internet TV."
Netflix continues to support "strong net neutrality, including for interconnection, to prevent large ISPs from holding our joint customers hostage with poor performance in order to extract payments from us, other Internet content firms, and Internet transit suppliers such as Level 3 and Cogent," Hastings and Wells said. "We’ve increased awareness of this issue globally. Our efforts have helped generate a record breaking number of comments to the FCC in favor of net neutrality, while in Europe policymakers are beginning to focus on this issue." Netflix will continue to lobby the U.S. government to block Comcast's planned buy of Time Warner Cable or "at the very least, prevent a combined entity from charging for interconnection," they said.
The Netflix letter broke little new ground on the company’s 4K content delivery efforts, and said nothing about its 4K streaming offering, including its recent decision to charge subscribers a $4 monthly premium on 4K streaming options. Its one mention of 4K was in reference to the Aug. 28, 2015, release of the first Netflix original feature film, Crouching Tiger Hidden Dragon: Green Legend. "A big budget continuation of the beloved 2000 Oscar-nominated film, it will debut simultaneously on select global IMAX screens and in Ultra HD 4k on Netflix, offering consumers the option to see this beautiful action film how and when they want," the letter said.