Netflix has some 35 million subscribers. But why wouldn’t it want more? Why wouldn’t it want possible access to 90% of the 116 million U.S. TV homes? Like HBO has, for example.
This is pretty easy in a business sense, since new set-top boxes and Internet-connected Smart TVs can access Netflix. Cable, satellite and telco distributors would also need to agree.
But wouldn’t this be of even greater value to pay TV consumers? Some European cable operators think so and have signed to carry Netflix.
Jeff Bewkes, chairman/CEO of Time Warner, mused on almost the exact opposite plan concerning HBO -- which has been identified as the TV network most closely resembling the likes of subscription video on demand services like Netflix.
Speaking at a Wall Street conference, Bewkes asked,"Where do you think the likely next subscriber is? Is it the 70 million homes that have bought 200 channels of stuff and they haven't bought HBO? Or is it the 5 or 10 million that didn't buy either HBO or that? It's pretty obvious; it's the 70 million homes. We’re working more on that.”
But, he added, "If a way to get them is through a broadband offering, our distributors would be properly interested in that. They haven't yet."
At the same conference, David Wells, chief financial officer of Netflix, while reiterating that Netflix’s target goal is some 60-90 million potential subscribers, said, “There is no reason to believe in our mind that with the 100 million pay-TV households... that anyone who is paying monthly for a television experience also wouldn’t be interested in an experience like Netflix if they have access to broadband.”
Now, this isn’t a clear change of marketing direction for either Netflix or HBO. Surely, it would make sense for consumers, who want to access all possible combinations of networks and distribution services.
Consumers can currently distinguish between Netflix’s and HBO’s brand values and identities: Netflix is a “streaming” or “digital” TV thing; HBO is a “pay cable network.”
What do they have in common? Both cost an additional $8 to $12 a month. Both come without advertising attached to their shows. Both have strong original programming (HBO, of course, has a lot more). Both have around 30-35 million current subscribers.
For consumers, the brand value and identity of both services are fairly well set now. In the future, there may be some tweaking. Still, some labels may change to protect innocent and ill-informed entertainment consumers -- and, of course, to protect the price as well.