Time Warner reported its 2013 earnings, and for the first time it broke out financial details for HBO, the premium cable channel that's often been compared with Netflix.
The two are bitter rivals. Reed Hastings, Netflix's CEO, recently called out HBO's top executive, Richard Plepler, for not being concerned about the password sharing that happens around its streaming service HBO Go that allows people to watch the channel online for free.
“I guess Plepler, the CEO of HBO, doesn’t mind me then sharing his account information," Hastings said in the conference call following its recent earnings report. "So it’s firstname.lastname@example.org and his password is Netflix B----.”
Who wins? HBO. Why? Costs. The two bring in about the same amount of revenue, but HBO has a much higher profit margin. HBO charges much more, about $20 a month, compared with Netflix at $8. (Hastings said he's looking at new pricing tiers.)
HBO also enjoys the help of its cable and satellite distributors, who foot most of the marketing and distribution costs in addition to handling all the customer service. Fairly compelling reasons why HBO isn't looking to sell its channel as a standalone digital product anytime soon.