http://www.thestreet.com/story/13111155/1/netflix-is-now-going-head-to-head-against-hbo-but-will-it-matter.html?puc=TSMKTWATCH&cm_ven=TSMKTWATCH
Netflix Is Now Going Head to Head Against HBO, but Will It Matter?
NEW YORK (TheStreet) -- Let the games begin.
Netflix and Time Warner's HBO are now firmly pitted against each other, as
HBO's over-the-top service, HBO Now, has launched with no issues so far.
Investors will be looking for clues from Netflix CEO Reed Hastings and team to
see whether there's been a noticeable impact from HBO's new service when the
streaming giant reports earnings on Wednesday. HBO Now is currently available
only on Apple devices; Cablevision has also partnered with HBO to bring the
service to its customers.
Pacific Crest Securities analyst Andy Hargreaves called HBO Now's launch "a
modest risk" to Netflix's second-quarter subscriber growth. But he noted
Netflix's original programming in the second quarter, which included House of
Cards, Unbreakable Kimmy Schmidt and Bloodline, would offset this. Daredevil,
which the company produced in conjunction with Walt Disney's Marvel unit,
became available to Netflix's subscribers this past weekend.
Netflix is in the midst of a global expansion, which it previously said would
be completed by 2016. The company ended 2014 with slightly more than 58 million
subscribers, though that pales in comparison to the 114 million subcribers HBO
has globally.
When Netflix reported fourth-quarter results, the company said it expected to
add 4.05 million subscribers, with 1.8 million of that coming domestically and
2.25 million internationally. Netflix forecast earnings of 60 cents a share on
$1.398 billion in revenue. On average, analysts surveyed by Thomson Reuters are
looking for earnings of 69 cents a share on $1.57 billion in revenue.
In the fourth quarter of 2014, Netflix's international streaming segment
resulted in a loss of $78.6 million, compared with a profit of $256.8 million
for the domestic streaming segment. The company hopes to be profitable
internationally in 2017. This is increasingly important as the company's
domestic growth starts to slow. In the fourth quarter of 2013, Netflix added
2.33 million subscribers, compared to 1.9 million in the fourth quarter of
2014. In the first quarter of 2014, Netflix added 2.25 million domestic
subscribers.
"For us it was very encouraging that what the world really wants is high
quality, great production values, great story telling, and that can be truly
universal," Netflix Chief Content Officer Ted Sarandos said during the
fourth-quarter earnings call. "It might be that there are some cultural
barriers to U.S. content as we get into more exotic markets, but my guess is
that we're going to continue to see our original programming travel and carry
the Netflix brand around the world."
In the first quarter, Netflix launched in Australia and New Zealand. It's is
currently available in 50 countries, and by the end of 2016 the Los Gatos,
Calif.-based company plans to be available in 200.