HBO’s OTT plans prompt Netflix response

What kind of fight should Netflix prepare for? The acquisition strategy of HBO Nordic might give the streaming giant a taste of what's to come, execs say.
October 15, 2014

Updated on Oct. 16, 9 a.m: HBO is untethering its customers from their cable televisions, and will launch a stand-alone streaming service next year.

During a meeting for Time Warner investors in New York on Wednesday, the cable network’s chairman and CEO, Richard Plepler, said the service will try to capitalize on the 10 million American homes that have broadband-only TV access.

“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, in its Q3 earnings report.

“That is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO,” he said. “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.”

The move will put HBO — home to recent TV hits like Silicon Valley (pictured), Girls and True Detective — in direct competition with Netflix and other streaming services, and gives viewers without a cable subscription a way to access its programming.

Netflix, which considers HBO its main long-term competitor, issued a statement on Wednesday in response to Plepler’s announcement.

“The competition will drive us both to be better. It was inevitable and sensible that they would eventually offer their service as a stand-alone 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 stated in its Q3 earnings report, which is attributed to CEO Reed Hastings and CFO David Wells.

If HBO chooses to start licensing content — even if it’s from just its sister companies — it will increase competition when it comes to bidding for streaming rights, said Netflix’s CCO Ted Sarandos during the company’s earnings call.  This has been the case in the Nordic countries, where HBO offers consumers a subscription to its service without having to buy a cable package. This put it in direct competition with Netflix, company brass said.

“They’ve been quite aggressive in the Nordics,” said Hastings, about the market.

“I think they’ve been licensing broadly, they just licensed a number of Starz’s titles. So they’re willing to license beyond their core platform. They’ve done pretty well and we’ve done very well.”

In the U.S., HBO currently offers the streaming app HBO Go to subscribers, and has made some of its content available via Amazon Prime, but those offerings have not quelled demand from viewers who do not have access.

The network’s scripted hit Game of Thrones is the most illegally downloaded series in the world, according to a report released by anti-piracy security firm Irdeto earlier this year. During a 4-week period in January and February, the fantasy drama was illegally downloaded nearly 1.6 million times.

From Realscreen with files from Melita Kuburas

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One Comment »

  • Frank Massa said:

    Now what about Canada or canadian Content ? If that’s even an ISSUE !

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