Netflix didn’t deliver the subscriber growth that investors were hoping for, but hey, it managed to keep up with today’s news cycle — specifically, HBO’s short-on-details announcement that it will be launching a standalone streaming service next year.
CEO Reed Hastings and CFO David Wells managed to squeeze the news into today’s investor letter, where they say that HBO’s move was “inevitable and sensible.” The letter acknowledges that Hastings has long portrayed HBO as Netflix’s big competitors, a statement that has become more plausible over time. But they also suggest that since there’s not much overlap in content, “many people will subscribe to both Netflix and HBO” and that the services will “both prosper.”
This was actually a subject of debate within the TechCrunch team this morning — after all, consumers are only going to subscribe to so many streaming video services before they feel like they’ve got enough video and/or they’ve exceeded their budgets. On the other hand, if you’re really excited about Game of Thrones on HBO, and you’re just as excited about Orange Is The New Black on Netflix (or, to sneak in a plug for my favorite of the Netflix Originals, BoJack Horseman), there’s a good chance you’ll subscribe to both.
Netflix also addresses the competition issue at another point in the letter, noting that “per-member viewing and retention in the US are as strong as ever.” As a result, it argues that “increased competition from piracy, TV Everywhere, Amazon Prime Instant Video, Hulu, etc.,” wasn’t a factor in its disappointing subscriber numbers.
Anyway, here’s the full comment about HBO:
Starting back in 2011 we started saying that HBO would be our primary long-term competitor, particularly for content. The competition will drive us both to be better. 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.