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Netflix now bigger than HBO

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Re: Netflix now bigger than HBO

#71

Post by dublinben »

r00fus wrote: post #29
blantonl wrote: post #17

Apple has $100b+ cash on hand. From a strategic perspective, Apple really needs to give a hard look at Netflix.

How long would Netflix's contracts last if it was Apple (huge threat to media companies) who owned them? Netflix has already lost some of it's content because they were deemed too big of threat to the content provider's main business (e.g.: Starz [1])... I only imagine this problem would magnify 100x if Netflix were owned by Apple. [1] http://money.cnn.com/2012/02/29/technology/netflix_starz/ind...

Could the studios really afford to cut out Apple and the iTunes store? They probably control most of the digital market.

Re: Netflix now bigger than HBO

#72

Post by ajdecon »

CamperBob2 wrote: post #60
lotso wrote: post #26

Earlier quoted context omitted.

> HBO actively refuses to even think about an Internet-only subscriber model. And you know this how? I'm pretty sure the execs at HBO have run the numbers. Why HBO Can't Afford To Offer A Stand-Alone Streaming Service http://www.forbes.com/sites/erikkain/2012/05/11/why-hbo-cant...

I know it because I actually read the article you linked to. Funny, Netflix seems to 'afford' it just fine.

Netflix doesn't already have a huge amount of revenue from cable providers. Whether HBO could "afford" a streaming-only option is irrelevant; the question is, could they make as much?

Re: Netflix now bigger than HBO

#73

Post by riggins »

blantonl wrote: post #17

Apple has $100b+ cash on hand. From a strategic perspective, Apple really needs to give a hard look at Netflix.

MSFT is the company most often mentioned as an acquirer.

I believe they have the Xbox set up so Netflix works right out of the box.

Re: Netflix now bigger than HBO

#74

Post by pisarzp »

jebblue wrote: post #67
filmgirlcw wrote: post #45

Earlier quoted context omitted.

That becomes the question. The problem is that their current production slate indicates that they maybe have one -- maybe two -- standout shows to do a year. HBO typically has 4 (right now that would be Game of Thrones, Girls, Boardwalk Empire and True Blood with The Newsroom being an easy slot for #5). Right now, Netflix's original programming track record is really spotty aside from House of Cards -- which is absol…

Netflix just needs movies, we haven't watched HBO since the 80s'. Their programming was never why we watched anyway. It's all about the movies. If I want original programming, and we do, we watch the education channels, in HD, free OTA.

I think that's it's actually the other way round. Popularity of YouTube and shows like Game of Thrones proves that people are tired of long movies. Attention span has shortened and people want condensed action delivered immediately.

Re: Netflix now bigger than HBO

#75

Post by jfb »

CamperBob2 wrote: post #22
malkia wrote: post #11

My wish is NetBO = NetFlix + HBO - then I can forget about cable provider. But as others are pointing out - it would be bad for competition.

HBO has a bullheaded insistence on distribution through cable operators, though. I can watch Netflix without a cable connection but HBO actively refuses to even think about an Internet-only subscriber model. It's reminiscent of Sony's attempt to keep their content studios and product groups under the same tent. Any company whose business model is based on running unstoppable forces into immovable objects is always go…

The people I talked to at HBO certainly were smart enough to have crunched the numbers (this would've been in 2007 or so, but I have no reason to think its any different now.) if they're bullheaded, it's because they make shitloads of money from their current business model.

Re: Netflix now bigger than HBO

#76

Post by GFischer »

aidos wrote: post #35

I'm really cheering for Netflix. Outside of the US (I'm in the UK) people have complained about a lack of content but I'll pretty much give all my money to the people who bring back Arrested Development.

I'm in Uruguay, where we get 1/10th of the US content, and it still blows local cable out of the water :) .

Video on demand (with no ads!) is a killer feature for me.

Not to mention it's way cheaper than local cable - I'm paying for three subscriptions (mine, my parents' and my uncles') for less than one month of basic cable.

The day they can simulate cable's mindless zapping (some sort of preprogrammed channels), and get sports on board (I'm an NBA fan, and I'd like to watch Champions' League football too)

Re: Netflix now bigger than HBO

#77

Post by pisarzp »

blantonl wrote: post #17

Apple has $100b+ cash on hand. From a strategic perspective, Apple really needs to give a hard look at Netflix.

With such a huge user and fan base and strong relationships with content providers, why would they spend money on acquisition instead of building even better service themselves? Especially that Disney is so closely connected to Apple so no problem in having original content as well?

Re: Netflix now bigger than HBO

#78

Post by riggins »

filmgirlcw wrote: post #51
dbcooper wrote: post #14

It would've been nice if that article compared revenue and profit numbers, rather than just how many subscribers each service had ...

Well that would have ruined the whole point of the article. HBO accounts for 25% of all of Time Warner's profits. That's significantly more than what Netflix can offer. And it would also be useful if they did the revenue per user figure -- but again, that wouldn't be a tweet-worthy and sexy headline. (It would have also required the author to understand the content business but I digress).

the netflix numbers are actually pretty easy. At $8/months, it's ~$96/year ... which is close enough to $100 to make for easy math.

Quick and dirty numbers (on just the domestic streaming).

At 30M subs, run rate revenue is approximately $3B. They had about $2B in content commitments. Delivery costs (i.e. bandwidth) runs about 20% of revenue. So on their $3B, $600M goes to delivery, $2B goes to content, and they have $400M-ish in profits.

NFLX is difficult to value because it's growing so fast and the content cost is a moving target. If NFLX can keep content costs around $2B, then every incremental customer is 80% profit. Every 1M subs they add, is $100M in revenue and $80M in profit (capitalize that at 10x and you're adding $800M in valuation ... keep in mind they added 2M domestic subs in the last 3 months). Some people argue that content providers will demand higher fees as NFLX increases subscribers. I'm not convinced. They walked away from Starz and they cut a deal with Disney that doesn't look any more expensive than what they were paying previously. And they're also building a library of owned content.

It's definitely one of the most interesting stories to watch.

Re: Netflix now bigger than HBO

#79

Post by ignostic »

The figures don't include pirating. If HBO had been smart enough to launch and promote HBO GO as a stand-alone service, pirating would be lower and streaming/revenue/official viewership would be higher.

Re: Netflix now bigger than HBO

#80

Post by CamperBob2 »

dangrossman wrote: post #70
CamperBob2 wrote: post #60

Earlier quoted context omitted.

I know it because I actually read the article you linked to. Funny, Netflix seems to 'afford' it just fine.

If HBO were to go internet-only, it'd lose the major cable operators heavily promoting them for free. They only market premium channels so hard because it helps sell expensive cable TV service. HBO would lose subscribers immediately as operators no longer actively replace subscribers for them as others churn out. To make up for the lost stream of customer acquisition, they'd have to: a) Cut prices by more than 50% to…

HBO would lose subscribers immediately as operators no longer actively replace subscribers for them as others churn out.

But that's going to happen -- and is happening -- anyway.

"no, we shouldn't throw away $10+bn/year to give Bob his internet subscription while we're in the midst of a death battle for the future of digital entertainment distribution".

"What? A phone that plays music?! Are you crazy? Do you realize how much money iPods brought to this company last year?"

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