Netflix's arrogant mistake: Taking on HBO

Reed Hastings went after the premium cable network as competition, but so far the rivalry has been weak.

By TheStreet Staff Sep 24, 2013 1:01PM

thestreet logoNetflix login screen. © Mike Blake/Newscom/ReutersBy Rocco Pendola


In due time, Netflix (NFLX) sentiment should regress toward a less euphoric mean. But, of course, the media isn't prepared to face reality just yet.

After what can be nothing other than an Emmys disappointment for Netflix, most of the media's lead stories still look like something this:

"Netflix Wins Emmy for 'House of Cards,'" or "'Breaking Bad' Emmy is a win for Netflix, too."

Reed Hastings could take up methamphetamine production as a hobby, and this uncritical media would find a way to spin it righteous and positive.

Last time I checked, Time Warner (TWX) is the publicly traded firm that owns HBO. And it crushed Netflix on Emmy victories. But, in the financial media, stories that focus on TWX's success remain outliers. That's little more than abject journalistic failure.


Whether Netflix won the important Emmys -- the best actor award went to HBO and best drama went to AMC Networks (AMCX) -- or not, I was prepared to say the same thing:

Emmy nominations, Emmy wins, Emmy losses, Emmy snubs -- none of these things matter at all. Not even a little.

It's fantastic that Netflix was nominated. It's equally as fantastic that it won in a major category and picked up a couple Creative Arts Emmys. It would have been a bit more fantastic had it won best actor or best drama.

If it was shut out -- or had a less-than-thrilling showing like it did -- that wouldn't have mattered either. While it would not have been "fantastic," it would have amounted to little more than a bruised ego or something of the sort.

Same goes for HBO, AMC and the others. Because, again, winning Emmys doesn't matter.

The problem with the whole Netflix Emmys storyline is the media's insistence to spin it not only as meaningful, but as positive minus any level-headed analysis or critical thought. Hopefully, Sunday night provides Netflix with perspective. Hopefully it kicks Hastings' bravado down several notches. Maybe he will realize the inanity of his ways. He made nothing short of a bonehead move when he set up comparisons to HBO.

By situating HBO as the benchmark -- in quite arrogant fashion -- he created an impossible task. Nothing short of dazzlement can be quite good enough for Netflix. Yes, with the Emmys, but, more importantly with what actually matters -- viewership.

Hastings could have created a scene where he kept expectations necessarily low, while orchestrating a culture of cooperation between Netflix and HBO. It's not like HBO would trumpet Netflix as the future of television in public forums, but there's no question in my mind the network could have served as a productive model, a willing guide to Netflix as the definition of television continues to change.

Instead, Reed Hastings created an adversary out of HBO. That's just an all-around stupid strategic move. If you thought Netflix performed poorly on the same stage as HBO, AMC and others at the Emmys, wait until material disappointments start to surface. It will make 2011's Netflix stock crash look comparatively tame.


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Sep 24, 2013 2:39PM

Two years ago Netflix did nothing but ship dvd's in the mail and stream content created by others. Today they have Emmy winning original programming. I'd say that's a major success even if you're too stupid to realize or admit it.

Sep 24, 2013 2:29PM
Who cares. Netflix is way better than that crap and cheaper too.

Thats why even though the pissed off many of their users a while back they came back swinging for round II. No matter how you package it, nothing beats a good value, and Netflix is a great one.

Loyal to the end.

Sep 24, 2013 2:55PM
Oh now it's arrogant to try and take on the competition????  What an idiot article
Sep 24, 2013 2:56PM
who gives two clucks about the emmys?

moving on.

Sep 24, 2013 1:58PM
It's not Netflix's fault they did poorly at the Emmys.  The reason why Netflix went 1 for 14 is because the entertainment industry is not yet ready to change.  Hollywood apparently isn't quite ready for a company like Netflix to challenge the existing system where TV programming airs on the networks or on cable channels, only.  The same thing happened a few years back when the movie "Avatar" was nominated for umpteen Oscars but only won one or two minor awards...the industry just wasn't quite ready to reward a film that was 95% computer generated and made use of very few union card-carrying actors, camera people, set designers and costume designers.
Sep 24, 2013 1:57PM

Hmmm... Not much to say about someone who has no idea what they are talking about. The fact they were nominated. Big win. Not being a main stream TV production. Big Win. And if this Rocco guy had any sense he would have bought Netflix at 50. Like me. Big win! Sounds like a loser story. Oh wait Netflix over $300 hundred..... Laughing all the way to the Bank. Emmy's are not the focus Satisfying the stock holders is and the story of Netflix is great. With or without an emmy its all good. Maybe educate yourself on the fact that you are even talking about Netflix is the win. LOSER. Hold on have to laugh..........all the way to the bank. Netflix is an online streaming media company not a TV company the fact that you are thinking they are competing with TV is the joke. They are competing but their market is different. But wait your the "writer" of this informed story sad you get paid for this.



Sep 24, 2013 2:47PM
One thing the writer doesn't mention is the dramatic turnaround Netflix has made. They moved from being a mail-order DVD rental company, to a streaming video-on-demand company and ultimately to a content creator company. Every time the financial "experts" tell us Netflix is dying, it reinvents itself. Yes, Netflix has made some mistakes -- as has every person or corporation since the beginning of time, but Netflix always recovers and reemerge stronger. The Emmy wins prove that Netflix is providing quality original content, and not just vomiting up reruns.
Sep 24, 2013 3:03PM
We love Netflix and have for years. So far HBO and the others cost way too much and don't deliver.
Sep 24, 2013 2:41PM
Myself and many others were pissed that Netflix doubled their price, but now that I see it was for good reason, I am OK with it. I was used to having the cable companies raising their rates to "improve quality" and the only thing I ever noticed were more commercials and more and more "reality" shows. Their original series they are coming out with are worth way more than $8 per month.
Sep 24, 2013 3:06PM
Cable companies should pay this clown to be a cheerleader for them. Netflix landed in the awards races head to head with the long time heavy hitters. HBO and cable companies need to fear Netflix, morons like this article author fail to recognize that if Netflix can develop legitimate contenders then they won't need to pay for the rights to shows. It's the show not the delivery method that people want to see. If Netflix doesn't need to pay for the shows then networks and cable companies no longer get revenue and they die like the dinosaurs. I've never met anyone who watches a show because of the channel it's on, they watch because of the shows content. Similar to how the Internet evolved allowing more opportunity for opinions to be "published" like the clown who wrote this article, streaming video providers like Netflix will break the network and cable companies stranglehold on televised media.
Sep 24, 2013 4:17PM
Wait until next year, when Orange is the New Black is eligible for the Emmys and then you can make a "comparison".  Netflix went from DVD service to producing great series. I would call that a success. I love Netflix streaming, HBO costs too much.
Sep 24, 2013 2:20PM
Money drives cooperation...not feelings. If its in Netflix's and HBO's interest to make more money together, it will be done with disregard to any good or bad feelings b/w them. This is business, not the 9th grade. So, if anyone in the media is trying to drum up a nonexistent would be this author - Rocco Pendola.
Sep 24, 2013 4:40PM
MSN loves to bash Netflix, Sears, and JCPenny almost daily. There is no doubt ulterior motives involved
Sep 24, 2013 3:39PM
What a strange article. Comparing Emmy victories as some sort of signal regarding the valuation of the respective stocks? I'm all for taking note of non-financial metrics, but this one seems very sloppy and not particularly useful.
Sep 24, 2013 3:16PM
I'm almost glad that Netflix made a bunch of losers drop their accounts, means those idiots are now paying 5x the price for cable while we sit back and laugh. If Netflix is smart, instead of spending tons of money buying the new blockbuster movies that suck, they should invest in obtaining the rights for the classics and off beat foreign flicks you can't get on the other services. When that market is cornered they can pick up the current crap coming out of Hollywood for pennies on the dollar. That's what I call a long term investment. The cable companies will go under and Netflix can control the market. Producers will have to cave to their price if they want to make any money.
Sep 24, 2013 2:10PM
is the story accurate as it shows a gain in netflix stocks at the header,
Sep 24, 2013 4:11PM
I guess you are not aware of the ever increasing number of people who are dropping satellite providers completely in favor of streaming video.  As far material disappointments go. I'll put my money on Netflix to deliver original drama and Hulu to replace the need for a satellite network feed. 
Sep 24, 2013 3:21PM
Media is plural of medium. I had a hard time getting through this article because it was so poorly written and constantly used media in the singular noun sense. I also hate seeing "the media" written as some shadowy otherworldly object on a top website. Websites are part of "the media" as text, images, video, and sound are all media of communication. Not to mention NONE of the articles discussed in this criticism are referenced in any way.
Yeah, don't you like reading stories by people you've never heard of, pontificating as if they are the guru of whatever trivial pursuit they hawk and thinking that the rest of us really care about their opinions? That's what social media gets you-unsolicited opinions by the masses! Some, at least, have the good graces to start their own blog; others use what looks like true journalistic media to spew their tripe! Caveat emptor! Anyone that claims it's true because they saw it on the internet would still buy the Brooklyn Bridge!
Sep 24, 2013 7:42PM

MSN Money has regularly run stories about the "demise" of NetFlix. But, I still have not found a better value for the money. Are they perfect? Not even close. Does somebody else do it better? Open for argument. Does anybody do it as well or better for the money? Not even close.

That NetFlix is mentioned alongside HBO as a provider of new material is crazy. They are up to, what, something like 4 or 5 shows total and have almost a year's experience.. And that's being generous. But, anything original they provide is a bonus to their customers. HBO, however, has been in that game for years and original programming is a big part of their business model.

Rocco, look back at what HBO offered in their early years of original programming. I am sure you can Google search some of the forgettable dreck they offered. It wasn't always "The Sopranos" over there at HBO.

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