COMMENTARY | The Associated Press is reporting that pay-TV heavyweight HBO has decided to stop selling discounted DVDs to Internet streaming heavyweight Netflix. Plus, the article also mentions that HBO continues to refuse to license its shows to Netflix for online streaming. Both moves are signs that HBO views Netflix as a competitor, rather than an online outlet for video, and HBO is probably right.
CNET reports that HBO and Netflix have a lot of common ground as entertainment outlets. As the article mentions, HBO started out as a premium service that ran movies until it managed to get a foothold on original programs that viewers wanted to see. Many Netflix subscribers already know that story sounds familiar, as Daily Tech is reporting the first Netflix original program is scheduled to start at the beginning of February.
HBO would be pretty smart to not give Netflix any competitive advantages, as HBO GO, the streaming arm of HBO, competes pretty directly with Netflix's streaming service. As the AP report states Netflix has about 23 million subscribers and HBO has about 29 million subscribers. One original programming hit could tip the scales into Netflix's favor. As CBS News reports, the two media companies will be going head to head for essentially the same audience, and whether that audience will pay for a subscription to both services is the real question.
As the companies begin to square off, it is hard not to give the initial edge to Netflix due to the variety of content already offered by the service. Provided Netflix can continue to secure licenses to the content already offered, one or two original programming hits would provide a solid enough foothold for future success. Since the CNET report indicates the company has plunked down $100 million for the first original program, "Lilyhammer," it would seem that Netflix is pretty serious about becoming a greater force in the television industry as well as the video streaming industry.