Reed Hastings Takes a Loud Shot at HBO

Netflix CEO Reed Hastings took a jab on tonight's earnings call at the network his company sees as its chief competitor: Time Warner pay-cabler HBO. Richard Plepler, co-president of the network, told Buzzfeed last week that shared passwords for its streaming service HBO Go had "no impact on business"—when asked about the statement, Hastings said, "It's plepler at hbo.com and his password is netflixbitch." As per usual, Hastings was quick with one-liners throughout the call—when Rich Greenfield (one of the analysts who interviewed Hastings, chief content officer Ted Sarandos and CFO David Wells for the live-streamed earnings presentation) asked if lowering the price of a single-stream subscription by $1 "really makes that much of a difference," Hastings replied, "At your income level, Rich, not to get too personal, it really doesn't." And yes, the actual business of the call was worth listening to, too. Hastings said the company was bullish on 4K (as evidenced by the company's recent announcement that it would stream all available content—some 40 percent, according to Hastings on today's call—in the higher-density format) "There's no tidal wave coming in the next few months but it is a great way to work with ISPs so that their higher-speed plans have more merit in the consumer's eyes," he said. "If you're on the revenue side, you're celebrating, because now there's a real need to upgrade to a 40 or 50 megabit plan." Perhaps the most underreported aspect of Netflix's business model is its ballooning content costs—something Hastings spoke frankly to, saying they'd increased by roughly $700 million to $7.3 billion, total. The exec chalked the increase in price up to new deals like the upcoming four shows based on Marvel Comics characters, as well as extensions of existing rights agreements (which shrank dramatically at the end of '13). Greenfield and JP Morgan Chase's Doug Anmuth quizzed the executives about a number of pressing topics for the company, notably net neutrality, a notion on which Netflix's success rests heavily (and against the preservation of which a D.C. court just ruled). Hastings and Wells were voluble on the subject in their letter to shareholders. "In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide," the pair said a co-bylined letter. "The motivation could be to get Netflix to pay fees to stop this degradation. Were this Draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver." Hastings has been vigilant on this topic for a while now—when Comcast experimented with bandwidth caps for non-Comcast properties, he took to Facebook to tell off the cable and Internet operator. Hastings also addressed the possibility of creating programming tiers in order to defray content costs (raised by Anmuth). "There's a dozen things that you could tier on in principle, but the trick is making it understandable and making it feel fair to consumers," he said.

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Reed Hastings Takes a Loud Shot at HBO

'His password is netflixbitch'

Sam Thielman

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