Though the match-up could perhaps be likened to a dominant sports team going up against an upstart challenger that has a decent team spearheaded by one superstar player, the announcement of HBO that they will soon offer an exclusively online service has prompted Netflix‘s response of how it will make both of them to push each other to the limits, and that both will become stronger for it.
HBO had announced last week that by the year 2015, they will be offering a ‘digital version’ of their subscription TV service in 2015, the first for a brand that currently requires their own payments on top of a regular cable/satellite subscription (a system in place since foundation in 1972), including access to their HBO Go catch-up platform, but with the alternative business plan will allow consumers to pay a similar amount for only the online streaming parts.
Responding to the news with a letter to their shareholders, Netflix claimed that they have immediately bumped HBO up to the public status of being considered their “primary long-term competitor”, but that they had their eye on the network in that regard even before the announcement.
They wrote to shareholders: “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.”
While they have to contend with 25% share price drops due to below-expectation performances during the last quarter without HBO competing, will the news that the long-running brand soon will be be enough to turn off some holders, or will the competition indeed drive both brands to another level in the online streaming market?