I guess you can say that Netflix (NFLX +0.34%) was asking for it. Taunting Time Warner's (TWX +0.00%) HBO over and over again has a price, and that comes in the form of an unlikely partnership, with HBO teaming up with another Netflix rival.
One of the few shortcomings of Amazon.com's (AMZN +0.53%) Fire TV was that it couldn't stream content for HBO subscribers; but that's going to change in a major way. Amazon and Time Warner are announcing this morning that HBO GO will be available through Fire TV set-top media players later this year. Perhaps more important, older HBO shows will be available through Amazon's Prime Instant Video platform later next month.
The HBO content land grab is huge. We're talking entire runs of The Sopranos, The Wire, Six Feet Under, and other classics available through Prime Instant Video starting May 21. Earlier seasons of some of HBO's current shows, including Boardwalk Empire and True Blood, will also be available. The deal also includes original HBO movies, documentaries, and comedy specials.
This gold mine of content isn't going to be a big deal for current HBO subscribers. They can access the premium movie channel's content through HBO GO. However, this will be a game changer for the majority of the country that does not care to pay $15 a month on top of their cable or satellite subscriptions for HBO. They can now pay far less -- just $99 a year after a recent price hike -- for unlimited access to Prime Instant Video, as well as monthly Kindle rentals and complimentary two-day shipping of all Amazon-warehoused merchandise.
If this sounds like a great deal for Amazon but a lousy one for HBO, you may be missing the point: Amazon's naturally going to be paying Time Warner a lot of money here. HBO also gets to market its new shows to nonsubscribers by showing earlier seasons. We've seen the spike in ratings that Netflix has delivered for current shows when it offers previous seasons of the serialized dramas. More important, this move strengthens Amazon at Netflix's expense.
"We are approaching 50 million global members, but that is far short of HBO's 130 million," Netflix CEO Reed Hastings wrote in concluding this week's earnings letter. "We are eager to close the gap."
Netflix knows when to play the underdog card. It makes taunting acceptable when it's David slinging stones at Goliath. However, we all know that Netflix is running away with the streaming market. Amazon's the closest rival in offering a stand-alone digital smorgasbord, but it's a distant silver medalist. That's the gap that may ultimately narrow if Amazon keeps grabbing content that isn't being made available through Netflix. From Downton Abbey to Nickelodeon and Comedy Central shows to original content, Amazon is differentiating itself from Netflix. HBO is an even bigger whale, and in Time Warner's eyes, anything that strengthen's Amazon's platform makes Netflix's weaker.
Netflix has made a lot of enemies along the way, but this isn't merely personal. It's business. If that's not clear, ask The Sopranos.
