Hastings explained that an HBO offering would be just another of a growing list of over-the-top content options consumers would be willing to pay for, including Hulu Plus, Amazon Prime, and cable VOD.
“It’s not much of a change in the direct competitive landscape,” said Hastings. “I don’t think it’s a significant impact on the consumer level.”
Of the multiple content options, he added, “There’s so many great sources of entertainment and consumers subscribe to many of them.”
But Hastings also drew a distinction between what competition Netflix faced for consumer subscription dollars and the impact HBO could have should it choose to license content from outside HBO. While Time Warner CEO Jeff Bewkes has indicated in the past that HBO could choose to license from outside of its walls–perhaps with its own sister studio, Warner Bros.–the company did not indicate in its announcement of the new service what its licensing plans are.
“HBO is another buyer if they choose to license from sister companies,” said Ted Sarandos, chief content officer at Netflix, who joined Hastings on the earnings call along with CFO David Wells.
Hastings also drew a comparison with the Nordic region, where HBO Go and Netflix have already competed directly outside the pay-TV ecosystem. “They’ve been quite aggressive in the Nordics and we’ve stayed well ahead,” he said.
Netflix also addressed the threat of HBO in its investor letter prior to the earnings call, which said, “Starting back in 2011 we started saying that HBO would be our primary long-term competitor, particularly for content. 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.”