Why HBO is no-go for Netflix

TV Everywhere No one should be terribly surprised by the “news” that Netflix is not in line for a deal with HBO to match its recent deal with EPIX. HBO and EPIX are not at all similarly situated with respect to either online or on-cable distribution.

EPIX is only available in about a third of cable/satellite homes. It needs distribution. It was also designed from the start to be a cross-platform channel that could support a number of different business models. HBO is the market-share leader among premium TV channels and is available in virtually every pay-TV home. It has exclusive rights to movies from three major studios and a highly regarded and highly rated lineup of original programming. Now, with HBO Go, there’s nothing much Netflix could do for HBO that it couldn’t do itself.

More critically, HBO Go is not, fundamentally, about gaining online distribution for HBO. It’s about making online access an exclusive value-added feature of HBO’s existing carriage deals with cable and satellite TV providers — value it will eventually extract from its distribution partners in the form of higher carriage fees. Introducing another service provider with its own subscription relationship with the viewer into the mix, such as Netflix, would be disruptive to the whole HBO Go strategy.

The whole point of HBO Go is to make subscribing to HBO more valuable to existing cable subscribers, thus making HBO more valuable to cable operators. Netflix would have to write a very big check indeed to HBO to get a piece of that action.

Further reading:

In a World Gone Small: Streaming Netflix is Still Coming to an Apple iPhone Near You

HBO Headed to iPad But Not to Netflix

The Ultimate Guide to TV Everywhere (GigaOm Pro $$)