HBO ahead on profits for now, but Netflix is better positioned, analyst says

Netflix (NASDAQ: NFLX) finally got one up on HBO in subscriber revenue last quarter, edging past with $1.146 billion versus HBO's $1.141 billion, but that may not be a one-time thing: Netflix is much better positioned for success, both in the U.S. and worldwide.

That's the determination of nScreenMedia analyst Colin Dixon, who compared the two companies in five distinct areas: customer data, client reach, catalog depth, price and international strategy.

Netflix's client reach and ability to mine customer data more deeply are two big advantages. For example, while HBO Go is increasingly available on mobile devices, consoles and streaming devices, Netflix is already there--available on almost every device out there. Further, HBO is currently dependent on Nielsen's viewer measurement, which means that while the network has far more subscribers--114 million globally--it doesn't have the deeper access to client data that Netflix does from its 50 million-plus subscribers worldwide.

HBO is hobbled by its pricing scheme as well. "HBO now costs $19-$20 on many pay-TV systems. It also comes encumbered with the need for a $60-$70 pay-TV subscription," Dixon wrote in a blog post. "Though operators are introducing cost-efficient bundles of broadband plus basic TV plus HBO, in the Internet age being tied to a bundle at all is a disadvantage."

Internationally, Dixon pointed out, Netflix is also jumping ahead. While HBO Nordic has a penetration of 4 percent, Netflix's penetration in Denmark is 29 percent. Furthermore, good quality broadband is key to Netflix's expansion decisions: "Where it finds those conditions it has proven a master of execution," Dixon said.

So, despite Netflix CEO Reed Hastings' gentle tweak of HBO in a Facebook post last week, it's not far-fetched to see the SVOD service surpassing HBO's pay-TV-centric service in several more earnings segments.

For more:
- nScreenMedia has this post

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