It startled plenty when Netflix CEO Reed Hastings indicated his company’s principal opposition wouldn't be Hulu or Amazon, but the Cadillac of premium TV content -- HBO. Netflix was trying to recover from a marketing mess and resulting stock price plunge when he spoke, but no one could accuse Hastings of letting that curb his enthusiasm.
"The competitor we fear the most is HBO Go," Hastings said at a Wall Street event in December. "They aren't competing directly with us now, but they can. HBO is becoming much more Netflix-like, and we're becoming much more HBO-like."
HBO Go is the much-lauded streaming service that gives HBO subscribers access to loads of the network's original series and exclusive movies across platforms such as an iPad, Xbox or connected TV. Starting next month when the new season of “True Blood” premieres, the Kindle Fire and multiple Android tablets will be added to the roster.
Hastings does have one stat working in his favor – potentially. HBO has 29 million subscribers and just about all have access to Go. Netflix predicts it will have the same amount of streaming customers by the end of the year. Those, of course, don't need a pricey cable subscription.
Yet, one of HBO’s leaders, Co-President Eric Kessler, didn’t seemed fazed at all Thursday. From his comments, you got the sense that HBO executives joined in a collective “Huh?” when Hastings made his we're coming comments.
Netflix is moving deeper into original content; Amazon Studios said this week it would expand into comedy development; and Redbox and Verizon have something cooking. Kessler – who didn’t mention Netflix or any other business by name -- suggested there are apples and oranges.
“We don’t technically complete with those streaming services,” he said at a Broadcasting & Cable/Multichannel News event.
Principally, HBO offers a subscription package that includes the linear TV service, a traditional video-on-demand offering and Go -- which had its one-year anniversary in its current form this week.
Netflix or Amazon might argue they offer loads more content than HBO Go’s 1,400 hours. Kessler said true, but that’s fine. “We don’t want to play in that ballpark,” he said. “We’re not about quantity, we’re about quality.”
Then, there’s HBO’s exclusive content, which includes its top-tier originals and films and where streaming is only available via Go. That's in contrast to so much other streaming content being available on multiple sites and a non-exclusive basis, Kessler said.
“The other streaming services out there tend to be aggregators … technology companies that aggregate content,” Kessler added. “HBO is a content creator.”
Of course, there are those attempts by Netflix, Amazon and Hulu to push into originals. But Kessler seemed to be echoing comments made by CBS Corp. CEO Leslie Moonves about Netflix. “Until they are doing 22 hours a week of premium content, we do not look at them as a competitor, but rather another place to put our content,” Moonves said.
At HBO, the Go product is for both now and later and will continue to be a major company focus. An example of its prominence is the company altering its hall-of-fame tagline -- “It’s not TV. It’s HBO.” -- to simply “It’s HBO” to reflect the brand going multi-platform.
For now, 92% of HBO viewership takes place in traditional form on the TV screen, 6% occurs via VOD and 2% via Go. That will change as platform-agnostic younger people -- maybe Netflix devotees -- consider an HBO subscription.
“This about making sure that our business stays relevant … to the next generation of HBO subscribers,” Kessler said.
“It’s important for us not only to create the kind of programming that that younger demographic wants … but you need to deliver the content on the device that they watch the content on,” he added.
HBO Go is also a tool now to keep current subscribers and attract new ones, who may also be gravitating to new platforms.
HBO data shows 50% of Go content is viewed on a desktop or laptop; about 45% on mobile devices (majority iPads); and just 3% to 5% via connected TVs.
Efforts are underway to turn Go into more of an interactive platform, where users can do more than just view dozens of “Entourage” episodes or fully catch up on “Game of Thrones” on a rainy day.
“Not just watch the content, but experience it in a new and different way,” Kessler said.
Another Netflix challenge?