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How Netflix Is Taking The News Of HBO’s Streaming Subscription

Change is coming to TV (finally) and Netflix seems to be caught in the middle.

The post How Netflix Is Taking The News Of HBO’s Streaming Subscription appeared first on ThinkProgress.

Netflix on tablet

CREDIT: AP Photo/Elise Amendola

Netflix has enjoyed a virtual monopoly on streaming video — a third of all U.S. Internet traffic is comprised of people watching video on Netflix. But as two major networks announce they are launching standalone online services, the popular video streaming company seems to be treading water in an effort to calm customers and investors.

Almost as soon as CEO Reed Hastings released a letter to investors Wednesday, Netflix’s stocks took a nose dive in response to HBO’s announcement of its new streaming service that’s primed to be the company’s biggest competitor.

HBO announced Wednesday it would launch a standalone HBO Go subscription in 2015 for the approximately 80 million people in the United States who don’t subscribe to the channel.

Netflix CEO reassured customers that HBO’s plan to offer a cable-free way for customers to watch the network wasn’t going to keep the company down. But news of HBO’s new endeavor seemed enough to scare investors along with reports of stagnant customer growth. Netflix’s stock dropped more than 23 percent Wednesday, down to $331 a share, in after hours stock trading.

The company also reported disappointing growth in the third quarter, when the company failed to attract new customers, but still managed to almost double its revenue compared to 2013. “This quarter we over-forecasted membership growth,” Netflix wrote in its letter to investors. The company boasted nearly $59 million compared to $32 million this time last year.

Netflix attributed the lag in new subscribers is because of new higher pricing and waning energy surrounding the second season of the company’s original series “Orange is the New Black.”

To complicate matters, CBS unveiled its own subscription-based online streaming service “CBS All Access” Thursday that will let customers watch live television programming and shows on demand without cable, The New York Times reported.

But Netflix contends that it will thrive off the new competition. “Many people will subscribe to both Netflix and HBO since we have different shows, so we think it is likely we both prosper,” Hastings wrote about HBO’s announcement. HBO is Netflix’s “primary long-term competitor” when it comes to content, and the company’s decision to offer an online service was “inevitable and sensible.”

The television industry is going through a change as more customers ditch traditional cable packages in favor of a la carte, on-demand streaming. And as a result, customers should expect more online-only offerings that allow them to watch what they want when they want from cable channels and broadcasting networks in the coming years.

As for Netflix, they seem to be upbeat about the industry changes. “We pioneered the space,” Hastings told CNET. “They’re playing rapid catch-up, which is what you do when you get behind.”

The post How Netflix Is Taking The News Of HBO’s Streaming Subscription appeared first on ThinkProgress.

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