HBO Disses Netflix Again and Halts Discounted DVD Sales

Before we get into the who and what of this article, let's just put a few things into perspective. First of all, Netflix has around 20 million streaming customers and HBO has around 28 million pay TV customers. That means that HBO has some clout, and so it's new HBO Go service, while limited in scope, is certainly something to consider for those people who consistently pay for the service. And really that's where this issue gets dicey. Cable and satellite companies that hate Netflix are to be expected - I mean, the company represents the era of new media and content delivery in a way that they are just now starting to appreciate (and get consistent at). But when content providers start hating on Netflix, it's a concern.

And hate, they do.

HBO has denied Netflix the licensing rights to its top shows for years. But clearly, the company's finger-in-the-eye approach to halt bulk sales of DVDs to Netflix means that their move towards encouraging subscribers to jump on HBO Go is becoming more critical. HBO really wants to leverage its subscribers and they truly feel people will, if forced to make a decision, choose their one outlet over a rival like Netflix.

So what does this mean for Netflix? Not much. The company can still purchase the DVDs, just not for cheap. They'll need to buy them at retail or through distributors. Netflix isn't about to discontinue providing HBO movies and shows to its subscribers - it's just going to take the financial hit. But they also have to really be sitting up and taking notice of just where HBO is going. Last month the CEO of Netflix, Reed Hastings, who has made some really stupid moves in the past year, told investors that HBO GO was the competitor he fears the most.

Based on past decisions by Netflix and their recent record, I'd double down on the opposite of whatever Hastings says. It's a good bet that the real fear Netflix should have is something they are probably not paying much attention to at present.

Comparing Netflix against HBO seems a bit odd to me, though. After all, Netflix streaming can be had for as little as $8 per month, while HBO costs at least $13 per month or more in most markets.The difference is content. If you want what HBO has to offer, then you'll go with HBO over Netflix, simple as that. If the opposite is true... you get the idea.

Starz Play, which includes content from both Sony and Disney will be pulling its movies from Netflix streaming in March of 2012 due to a fee dispute (they want more money and Netflix doesn't want to pay it). Is this the sign of the times for Netflix or can they bounce back with new deals? Given their recent spat of snafus, it's hard to know if there are any true visionaries in the company or if they just got lucky. I suppose we'll have to wait to see.