Is Netflix Looking to Make Nice With Its No. 1 Rival?

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Emmy Nominees
Keith Bernstein/HBO/AP
In the arena of premium video services, Netflix (NFLX) and Time Warner's (TWX) HBO can be fierce competitors. It may not seem that way to viewers entertained by "Game of Thrones" on HBO and "House of Cards" on Netflix. After all, there's nothing to stop someone from subscribing to both services, and many TV buffs do exactly that. However, as the industry's two leading premium video subscription platforms, they do ultimately compete for the same viewer dollar.

HBO has typically taken the high road, but Netflix CEO Reed Hastings has a history of taking potshots at his biggest rival. But a new Facebook post finds Hastings softening his tone -- possibly because the rivalry led HBO to strike a lucrative licensing deal with streaming competitor Amazon.com (AMZN) for a lot of HBO classic shows.

It should be said that HBO drew first blood. Time Warner CEO Jeffrey Bewkes decided to take a little jab at Netflix four years ago when asked if the then nascent streaming video service threatened HBO's business. "Is the Albanian army going to take over the world?" he joked at the time. "I don't think so."

Let's go over some of the biggest hits in this public rivalry.

Hastings on the Attack

HBO's popularity remains strong, but Netflix's global subscriber base has more than doubled since Bewkes' comment. Hastings hasn't forgotten the remark, and he's also not been shy about taking shots of his own.
  • "Excited to see HBO join us in offering stand-alone streaming service in Scandinavia," Hastings posted on Facebook two summers ago when Time Warner's premium channel announced that it would be made available in a few Scandinavian countries as a streaming platform without the need for a costly cable or satellite television subscription that it requires closer to home. "What about the USA? We thought the first match-up would be in Albania."
  • Last summer after "House of Cards" and "Arrested Development" locked up a combined dozen Emmy nominations, Hastings posted on Facebook: "Albania takes it up a notch."
  • Earlier this year, during Netflix's fourth quarter earnings call, Hastings was asked about HBO's diminishing concerns about the popularity of shared HBO GO passwords. In a head-turning moment, Hastings joked that HBO CEO Richard Plepler's HBO GO password is "Netflix" and followed that up with an expletive.
Mending Fences

Hastings clearly isn't afraid to take shots in public, but his latest missive -- bragging about finally surpassing HBO in terms of subscription revenue -- had a surprisingly conciliatory tone last week.

"Minor milestone: last quarter we passed HBO is subscriber revenue ($1.146B vs $1.141B)," Hastings posted on Facebook last week.

However, instead of following that up with a comment about the Albanian army taking over the world, he had some kind words for Time Warner's premium movie channel. He conceded that HBO is still beating Netflix when it comes to profitability and Emmy awards. He also admitted to watching and enjoying HBO's "Silicon Valley," claiming that it hit close to home. "HBO rocks, and we are honored to be in the same league," he concluded.

The jab is still there, of course. Netflix generated more subscription revenue in its latest quarter. However, heaping HBO with praise and compliments is a new turn.

Of course, this isn't going to change the fact folks can now watch "The Sopranos," "Six Feet Under" and other classic HBO shows on Amazon's Prime streaming service. It's not going to make HBO any more likely to cough up "Game of Thrones" or any of its other shows through Netflix. However, it is an olive branch. It's possibly a cease-fire as the premium video services realize that there's more to gain in working together than against one another.

Then again, all of this will go out the window if the next Facebook post that Hastings puts out is another knock on HBO. There's a lot of money to be made in this niche, and being cruel hasn't gotten in the way of kind success.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix. Try any of our Motley Fool newsletter services free for 30 days.


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mustangmaniac01

Sorry but HBO sucks. Everyone knows that.

August 13 2014 at 8:29 PM Report abuse rate up rate down Reply