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HBO has ruled out a content partnership with VoD platform Netflix, as the latter prepares to launch into a new international market later this year.
In a letter to shareholders announcing the company’s return to global profitability in the second quarter of 2012, CEO Reed Hastings and chief financial officer David Wells outlined their hopes to work with the premium cable channel, which has its own online platform in HBO Go.
“While we compete for content and viewing time with HBO, it is also possible we will find opportunities to work together – just as we do with other networks,” the letter said. “Consumers who are passionate about movies and TV shows are quite willing to subscribe to multiple services.”
But Charles Schreger, president of programming sales for HBO, said it had no intention of licensing its content to third-party SVoD platforms.
He told C21: “HBO GO is starting to represent real viewing for HBO. It’s pretty significant. We like to give our subscribers a lot of opportunity to see our programming.
“We do not license our programming to SVoD services, to Netflix or Hulu. We have a platform now [on which] people can see any of our programming whenever we want, so we don’t need to, nor do we want to make it available to our competitors. You can see any HBO programming there and it’s going to be increasingly significant for us.”
In its Q2 results for the period April to June, Netflix posted a global profit of US$6m and revenue of US$889m, compared with a US$5m loss and US$870m in revenue in Q1.
Its international subscription base, in Canada, Latin America, the UK and Ireland, increased by 550,000 in Q2, from 3.07 million to 3.62 million. Revenue from outside the US also grew from US$43m to US$65m.
Netflix in Latin America and the UK and Ireland both have more than one million subscribers, fewer than a year after launch, with a fourth international launch set to take place in Q4 this year.
Scandinavia, and particularly Sweden, has been heavily linked to the VoD service while Germany and Spain are also believed to be viable options.
Of its UK business, the company said it has “pulled ahead of LoveFilm in every important streaming-related metric” and said its biggest challenge is “competing effectively” with satcaster BSkyB.
Sky this month rolled out its Now TV internet television service, allowing access to its movie packages either through a subscription or pay-as-you-go model.
Netflix said Sky “would be our primary competitor in the UK, and now we potentially face increased competition from Sky’s new OTT service at £15 [US$23] per month, more than double our price.
“Our content libraries our mutually exclusive with no overlap of titles. As such, many households may subscribe to both services.”
Looking ahead, four million international subscribers are expected to be using Netflix by the end of Q3 this year.
Meanwhile, Netflix’s US subscriber base rose by 530,000, from 23.41 million in Q1 to 23.94 million in Q2, lifting revenue from US$507m to US$553m.
Netflix said it expected the London Olympics to have a negative impact on viewing and new subscriber figures for Q3 as the company strives to reach its target of seven million new domestic subscribers this year.
Of its competitors, the VoD service singled out multi-channel video programming distributors, and Comcast’s Xfinity in particular, as its “biggest long-term competition for viewing hours.”
In June, Hastings said Netflix viewers streamed more than one billion hours of content for the first time.
