Netflix boss Reed Hastings believes his biggest challenger isn’t Amazon, Blockbuster or even newcomer Verizon — but Time Warner’s HBO.
After a string of stumbles that have crushed his stock, Hastings braved a crowded room yesterday to tell investors that his biggest fear was HBO’s relatively new Web service, while he downplayed the rest of his streaming rivals, including reports that Verizon was looking to launch a Netflix killer.
“The competitor we fear most is HBO Go,” Hastings said yesterday at a UBS media conference. “HBO is becoming more Netflix-like, and we’re becoming more HBO-like doing originals. The two of us will compete for a very long time.”
While HBO is a highly profitable premium TV service, available only through a cable or satellite-TV subscription, Netflix bills direct to the consumer and will lose money next year as it embarks on an international expansion.
“They’re not competing with us directly, but they can,” he said, adding that HBO was in something of a “gilded cage” because its success depends on cable and satellite operators getting customers to sign up for HBO Go, a process known as authentication.
Even though Netflix has been bleeding subscribers after jacking up prices 60 percent, Hastings said streaming usage was like a “rocket ship,” with 1 billion hours streamed this quarter.
“We are a click-and-watch product, and we have to get as big as we can before everyone else catches up,” he said.
Netflix stock, which has lost nearly two-thirds of its value this year, fell another 2.8 percent yesterday to close at $68.14.