HBO Promises 600 Hours of New Original Content -- Should Netflix Inc. Be Worried?

By Markets Fool.com

Not so fast,Netflix.

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Just weeks after the leading streaming service said it would double its original programming slate this year,Time Warner's HBO stepped up with an offer of its own.

At a recent conference, Time Warner CEO Jeff Bewkes said HBO would add 50% more original content this year, enough for 600 hours. Bewkes did not say by how much the budget would increase, but the company allocated about $2 billion for total programming last year, about half of which went to originals. Netflix, meanwhile, has a total content budget of $6 billion, though it's unclear how much of that is devoted to original programming. But with 30 in-house shows planned this year, including big budget thrillers likeMarco Polo, it seems like a substantial portion would go to its own shows.

Source: Vice

While HBO and Netflix seem to be on a collision course with the former increasingly focused on driving viewership to its streaming HBO Now platform and Netflix diving deeper into originals, there are some important distinctions between the two services. For instance, much of HBO's new content is from news programming featuring talent like Jon Stewart and Bill Simmons, and the network signed a new deal with Vice.

The former host of The Daily Show agreed to produce short-form digital content for HBO Go and HBO Now with the possibility of a series or movie project later on.Simmons, the former ESPN star, will head up a number of new features, including a weekly talk show, a website with written work, and a podcast network.And last year, HBO expanded its partnership with Emmy-winning Vice news program to include a daily newscast, more weekly programming, specials, and its own channel on HBO Now.

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HBO, of course, is no stranger to serialized dramas with popular shows likeVeep, Girls, and Game of Thrones, but the network seems to be staking much of its future on news. It already counts among its hits topical programs like Real Sports,Real Time with Bill Maher, andLast Week Tonight with John Oliver.

Netflix, on the other hand, has avoided such programming, favoring serialized shows instead. Also, unlike HBO, Netflix dumps all episodes of a season onto its network at once. HBO releases them weekly at a scheduled time, primarily targeting its linear TV audience as HBO Now only boasts about one million subscribers.

Netflix CEO Reed Hastings has repeatedly dismissed the idea of expanding into news and sports, mainly because that type of content is best consumed live. Instead, the company will continue to focus on original movies and shows, leveraging the time-shifting nature of its platform in the process.

That makes the two brands essentially different as HBO is still married to the linear TV model, even as it builds out its own streaming-based content.

Not a zero-sum game
Both HBO and Netflix are adding subscribers and set records in viewership and revenue last year. Their popularity comes not at the expense of each other but of network TV and basic cable. Discussing competition in the industry, HBO CEO Richard Plepler recently said, "We know it's not a zero-sum game."

Reed Hastings has said essentially the same about other streaming competitors, predicting that linear TV will decline steadily, while Internet TV grows. The pie is getting bigger for companies like HBO and Netflix.

At a time when there is more scripted television than ever before, there is bound to be some fallout in the industry, but HBO and Netflix are adding subscribers for a reason. Both offer quality programming, free of ads, and, with HBO Go and HBO Now, allow viewers to watch at a time and place of their choosing.

As the two companies double down on original programming, subscribership should continue to grow. Like the Netflix content chief said when asked about the supposed glut of TV, "Someone else will have to slow down."

The article HBO Promises 600 Hours of New Original Content -- Should Netflix Inc. Be Worried? originally appeared on Fool.com.

Jeremy Bowman owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Time Warner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.