Netflix Stock Plummets As HBO Enters Streaming Race
This morning it was announced by HBO that they'd be offering up their own streaming service separate from Cable TV. That means Game of Thrones. It also means Girls, Boardwalk Empire, Veep, and a collection of AAA movies like Rush, Les Miserbles, and The Secret Life of Walter Mitty. It also means that Netflix will have its first real competition since it went streaming itself all the way back in 2007.
Netflix had to create the streaming video universe back when it introduced its "Watch Instantly" service. Before January of 2008, Netflix subscribers were given 1 hour of streaming content per dollar they spent on their monthly DVD subscription. After January, the restriction was lifted – and the floodgates were opened.
Fast forward to 2014 when HBO first announces they'll be opening their own respective floodgates. HBO Go will no longer be limited to those that pay for HBO through their cable subscription plan. HBO Go will be offered as a separate service.
Netflix investors are not thrilled about HBO coming to fight. HBO's internet-only service will launch next year.
Netflix earnings have been released this afternoon, right after HBO made their big announcement. We can't believe that's a coincidence.
In their Q3 2014 earnings report, Netflix shows that they're growing. Contrary to some reports being released today, Netflix certainly does not look like they're doing especially terrible over the past quarter.*
Net additions are up to 3.02 million users this past quarter in total streaming. That's 3.02 million users that've just subscribed over the past three months. That's up by 1.33 compared to the quarter before this one, and up 0.29 million compared to last year at this time.
*On the other hand, today they're not doing great.
Today in after-hours trading Netflix stock fell sharply. It's currently down by 111.89 points – that 24.9% of its value. While you can see NFLX value inch upward about 30 minutes after it fell sharply, we'll likely see more unpredictable ups and downs over the next few days at least.