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Netflix Passes HBO in Popularity

Sections: Streaming, Video

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Netflix logoAccording to a report at Bloomberg today, Netflix has surpassed HBO in terms of subscribers in the US, boasting 30 million paying customers (as of the end of September) as compared to HBO’s estimated 28.7 million. Shocking news? No. Interesting news? Yes. Especially as Netflix negotiates to move its streaming service onto cable set top boxes.

It’s heartening, though, to see just how fully Netflix CEO Reed Hastings has been able to turn his company around, taking it from the near-disastrous shakeups of two years ago to its current position as the King of Streaming Media. Also, not incidentally, taking it from a company that was trading in the sub-$70s back up to a present value of nearly $350 per share. As Bloomberg reports, the price of the stock has nearly quadrupled this year alone. We all scoffed at Hastings when he took our discs away from us, but apparently the man knew what he was doing.

Much of the renewed success of Netflix can also be attributed to smash hit shows like House of Cards and Orange is the New Black, and with Sony planning to deliver exclusive new content to Netflix sometime soon, the service certainly has a bright future in original content creation. Of course, what Netflix doesn’t have is access to HBO’s original programming. And this new revelation isn’t likely to make relations between the two companies any rosier.

Then again, not everyone is as optimistic that Netflix can keep increasing profits at this rate unless the company enacts some big (and probably very unpopular) changes:

Even should the company meet its growth targets, some analysts caution that unless Netflix raises prices and adjusts policies that make it easy to quit the service, it will be harder for Netflix to generate ongoing profit.

With tiered pricing, where people who stream a lot pay more, Netflix’s model might be more sustainable, said Laura Martin, an analyst with Needham & Co. who rates the stock buy and projects the shares will reach $425.

“The more hours a household watches Netflix, the faster Netflix’s value proposition falls, and the lower the probability of renewal the next month,” Martin said.

Read [Bloomberg: Netflix Poised to Pass HBO in Paid U.S. Subscribers]

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