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Yesterday AT&T Inc. unveiled its ever-so-popular HBO subsidiary's streaming service named HBO Max. Head over here for our coverage and details: Link. Anytime a large new streaming service enters the fray, Netflix is always the next topic of conversation.
Many analysts have been flip-flopping during the last few months on whether A) Netflix (NASDAQ:NFLX) will soon be dethroned and cut down by the onslaught of new competitive offerings or if B) The massive first-mover advantage Netflix enjoyed along with a large library of content will be enough to remain at the top of the world's streaming companies.
It's not surprising, after all, as Netflix used to play in the space all by itself. It was the only real streaming option in town for some time. Then came Hulu followed by Amazon (NASDAQ:AMZN) Prime Video, each with compelling libraries of their own. Despite this, Netflix has continued to add subscribers, with 6.77 million new users signing up last quarter alone.
Netflix investors aren't scared of upcoming challengers
Now comes the second, and possibly harder, round of challengers. Apple (NASDAQ:AAPL), Disney (NYSE:DIS), and AT&T (NYSE:T)have entered the chat!
AT&T owns HBO outright and yesterday its HBO Max service was announced complete with pricing. It's that pricing level that has provided Netflix investors a sigh of relief and a renewed sense of confidence. HBO Max will cost $14.99/month - eclipsing Netflix's most expensive premium tier at $12.99/month.
Top execs at AT&T even bad-mouthed Netflix, sending the message that higher-quality content could be had by switching to HBO Max. “We actually think our value proposition improves when we narrow the options, removing much of the filler no one watches anyway,” said Bob Greenblatt, head of entertainment at AT&T’s WarnerMedia division. Filler you say?
Despite the aggressive announcement, the next day Netflix shares gained by as much as 4.4%. It was good for the company's biggest intraday gain since it surprised with its earnings results on October 16th.
A strong rally after a competitive announcement is a strong sign that investors believe Netflix will be able to stand up against HBO's new streaming service, especially at current pricing.
Of course, the other two large threats on the horizon would be Apple TV+ ($4.99/mo) and Disney+ ($6.99/mo). Apple is handing away a full year of its TV+ service to iDevice buyers, and Disney+ is already feeling the push of its parent companies truly enormous marketing pull - just the other night the host of the wildly popular Dancing with the Stars looked directly into the camera and proclaimed that the Disney+ streaming service was "open for immediate pre-enrolling!".
We are still quite a ways off from seeing how the streaming wars will shake out.
