The companies don’t compete head-to-head but there has been constant comparison in light of Netflix’s accelerated sub growth and aggressive entry into original programming. For the 1st time, Time Warner released stats for HBO: AOIBDA was down 4% in 4Q to $414 million (included a 12% increase in programming costs) and rev climbed 6% to $1.3 billion. And HBO continues to be Time Warner’s gem, with 2 million sub adds over the past year—its highest increase in 17 years. 

"We don’t see any discernible effect on HBO’s subscriber numbers or pricing because of Netflix or other internet video subscription services,” Time Warner chief exec Jeff Bewkes said during the company’s earnings call last week. Calling Netflix services “complementary,” he said homes with HBO have higher usage of Netflix that those without. Netflix, on the other hand, generated almost as much revenue as HBO in 4Q: $1.2 billion. It finished 2013 with 31.7 million US subs, ahead of HBO’s 28 million subs.

Netflix’s outspoken CEO Reed Hastings made no secret that HBO is likely to be its “biggest long-term competitor-for-content,” he said it in his latest strategic manifesto, the Netflix Long Term View. HBO recently won long-term exclusive domestic movie output deals with Universal and Fox. “HBO bids against us on many original content projects” though it’s not a bidder against Netflix for prior-season television from other networks, Hastings acknowledged. In addition, the Time Warner net has “global reach and a strengthening technology capacity,” he said. Having said that, MVPDs have remained stable at about 100 million subs despite Netflix’s growing membership. That suggested most members consider Netflix complementary to, rather than a substitute for, MVPD video, Hastings said. Instead of competitors, perhaps “frienemies” is a better term to describe the Netflix-HBO relationship. 

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