Is Netflix Becoming the New HBO?


As Amazon (NASDAQ:AMZN) continues to spar with Apple (NASDAQ:AAPL) on the tablet, music, and e-book fronts while dipping its toes into the bricks-and-mortar retail game, a skirmish with streaming video provider Netflix (NASDAQ:NFLX) is heating up, and Time Warner‘s (NYSE:TWX) HBO will be watching the outcome carefully.

Amazon raised some eyebrows last week when news broke that it was hiring with the intent of producing its own comedies and children’s shows. That would put Amazon squarely in competition with Netflix and Hulu as companies that not only offer streaming video, but carry original content.

As reported earlier this week, the Web-based streaming video market itself is suddenly becoming much more crowded, and with Amazon also rumored to be prepping a consumer video streaming service (independent of the existing Amazon Prime) that would directly compete with the cheap, all-you-can-watch Netflix model, original content is seen as a key to differentiating these services going forward.

And then there were three

Which brings us to the news, reported on Tuesday through TechCrunch, that a second Netflix original show is in the works. Jenji Kohan, who created the popular Weeds for CBS‘s (NYSE:CBS) Showtime network, has reportedly created a new series called Orange Is the New Black. Making things even more interesting, rumors have Liz Friedman (co-executive producer of Fox’s House, which is wrapping up its final season), attached to the project as executive producer. Bloomberg expects Netflix to announce a 13-episode horror series, called Hemlock Grove, as early as next week, along with official confirmation of Orange Is the New Black, bringing Netflix’s original-content total to three.

Netflix’s first foray into a scripted series, Lilyhammer, had its debut in February and so far the critical response has been good, with IMDb giving the series an 8.5 (out of 10) rating.

The developments in the Web-based streaming TV market have several implications. First, there’s the potential for Amazon to find itself in a much deeper (and more expensive) battle than it might have expected when it first decided to take on Netflix.

Facing off with premium cable networks

Second is the implication that these upstart video streamers could have a real impact on premium subscription TV service. HBO has built a reputation around providing programming content that was too risque for regular cable TV, with shows like The Sopranos, Game of Thrones and Boardwalk Empire. The Netflix moves bring streaming video into direct competition with channels like HBO—not only for subscribers, but also in potential bidding wars for content and talent. It won’t be lost on anyone that one of the stars of Netflix’s Lilyhammer, Steven Van Zandt, appeared in HBO’s The Sporanos. According to Bloomberg, HBO currently has 93 million subscribers worldwide, while Netflix has 23 million.

An Amazon/Netflix rivalry on the original-content front is good news for consumers (more shows to choose from, downward-price competition), but could end up distracting Amazon and taking a bite out of HBO’s bottom line.

As of this writing, Brad Moon did not own a position in any of the stocks named here.

Brad Moon has been writing for since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.

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