Netflix had a horrible Q2 in which the company lost 850,000 subscribers after 60% price increases in subscription costs and the division of its DVDs-by-mail and streaming services. While the company managed to attract 500,000 new subscribers to its online stream service those numbers still led to a 91% decline in revenue.
In a letter to shareholders Netflix Inc CEO Reed Hastings warned that the company will likely return to the red in Q4 as they continue to pay for new and expensive partnerships meant to bolster their online streaming services. Deals with Pixar and other big budget studios can cost Netflix upwards of $30 million per movie.
In his shareholder memo Hastings also claimed to be working on a partnership agreement with competitor HBO, a move that would bring The Sopranos, Game of Thrones and other top syndicated HBO shows to the mix. Unfortunately for Hastings those plans were quickly squashed by HBO spokesman Jeff Cusson who told investors:
“We are not in discussions and have no plans to work with Netflix.”
HBO already offers its programs to current cable and satellite TV subscribers through its HBO Go platform for computers, tablets and mobile phones.
Netflix and HBO have never had a good relationship, earlier this year HBO refused to sell Netflix copies of its most popular series True Blood at whoelsale prices which are offered to retail stores.
In his letter to investors Reed Hastings wrote:
“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.”
Hastings in the meantime continues to refer to Netflix as “just another network” which signals his want to become the “cable TV provider” of the internet age, a move that means securing traditional cable TV shows, either in real-time or through quick-to-internet streaming.