One step forward, two steps back?
After proudly announcing on Wednesday that its customers had streamed a record 2 billion hours-worth of content in the fourth quarter of 2011, Netflix had the rug pulled out from it on Thursday, confirming to The Wrap that HBO would stop providing DVDs and Blu-Rays to Netflix at discount.
Still, Netflix apparently doesn’t anticipate anything stopping it from buying those discs at full price and then renting them to customers. As Netflix’s communications director Steve Swasey told The Wrap: “Netflix will continue to provide HBO titles on DVD and Blu-ray to our members.”
That’s thanks to the “First Sale” doctrine, which allows the secondary owner of a copyrighted product to loan it out, permitting rental companies. The doctrine doesn’t apply to streaming videos, however, which is where things get interesting.
HBO has never licensed the streaming rights to its content to Netflix. Almost two years ago, in February 2010, HBO launched its own streaming video service, “HBO Go,” allowing customers of HBO’s subscription cable network and on-demand offerings to access streaming content online.
It was immediately branded a “Netflix rival.” Since then, HBO has expanded HBO Go to mobile apps for smartphones and the iPad, most major cable providers, even the Roku streaming platform, which initially launched with Netflix in 2008.
Little wonder Netflix CEO Reed Hastings has repeatedly sounded the alarm on HBO Go as a major threat to his own company.
It’s also worth noting, as Hastings has admitted, that Netflix is increasingly intruding on HBO’s territory of offering original “premium” content: Netflix’s forthcoming political drama serial “House of Cards,” was reportedly purchased for $100 million in a bidding war against HBO.
We’ve reached out to Netflix and HBO, a Time Warner company, for more information on the reasons behind the abrupt change in their relationship and will update when we receive a response.
