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Netflix vs. HBO: Is the tide turning?


KEY POINTS AT A GLANCE

1) Needham & Co. is reporting that Netflix has reached 30 million paying U.S. customers, higher than that of the 28.7 million paying for HBO, Time Warner’s premium TV channel.

2) Hastings hopes that their new investments in original programming will help build the required customer loyalty to make this a reality and to differentiate the company from its competitors.

3) Unlike HBO, Netflix does not yet have the exclusive content that will keep customers with them for the long term.


Analysts estimate Netflix may surpass HBO in the future

By Andrew Montgomery, Staff Writer

After the success of Netflix’s award-winning show “House of Cards,” Netflix is showing no signs of slowing down. Needham & Co. is reporting that Netflix has reached 30 million paying U.S. customers, higher than that of the 28.7 million paying for HBO, Time Warner’s premium TV channel.

Although Netflix may not yet be offering exclusive programming of the same scale as HBO’s “Game of Thrones” or “Boardwalk Empire,” Netflix is in negotiations with various cable providers to gain more exclusive content. Netflix CEO Reed Hastings maintains the goal of becoming a Web-based TV network.  Hastings hopes that their new investments in original programming will help build the required customer loyalty to make this a reality and to differentiate the company from its competitors.

Scott Devitt, an analyst at Morgan Stanley, estimates that Netflix added 2 million total subscribers in the third quarter of 2013 and believes that Netflix could add an additional 4 million subscribers in the fourth quarter.

Although the numbers are looking good, Netflix pricing model still leads to concerns for investors. While HBO requires cable in addition approximately 20 dollars per month, Netflix only costs customers 8 dollars a month, with no penalties for cancelling.

Unlike HBO, Netflix does not yet have the exclusive content that will keep customers with them for the long term. However, with the success of recent Netflix exclusives such as “House of Cards” and “Arrested Development,” HBO can certainly expect heavy competition in the future.

Andrew Montgomery is a very disgruntled 4th year student at Ryerson University majoring in Computer Science. In his spare time he enjoys a good fight, wearing his custom-made monocle and top hat, and the occasional cup of strong English tea served with a delightful strawberry crumpet.

Photo courtesy to FastCompany.com & digitaltrends.com

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