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HBO stops selling Netflix cheap discs to curb competition

updated 03:35 pm EST, Thu January 5, 2012

HBO hopes to slow down Netflix with price change

HBO confimed Thursday that it had stopped directly supplying Netflix with discounted discs. The change won't affect Netflix's ability to get discs, but it will force Netflix to get discs from other sources, CNET was told. It isn't expected to hurt availability or prices in the near term, although Netflix has never had HBO streaming rights.

The move wasn't directly explained by HBO, but is presumed to be in retaliation for Netflix CEO Reed Hastings mentioning last month that he saw HBO Go as Netflix's potential competition. The streaming HBO-run service focuses on current TV shows and access only for existing cable and satellite providers. Hastings, however, saw the two converging on each other's territory, likely leading to HBO trying to slow down competition.

Netflix in the past year has been taking the HBO route by working on securing its own, original content that can't be bogged down by studios. It first landed a Kevin Spacey series, House of Cards, and is due to start its first series on February 6 with Lilyhammer.

HBO is owned by Time Warner Cable, whose CEO Jeff Bewkes is well-known for downplaying Netflix and being content with it only as a supplement to cable TV, not a replacement for it. Many critics believe that a short-lived trial of tiered Internet plans with very low caps was intended less to manage congestion and more to discourage those who would prefer to rely only on Internet video.

Pay-per-show services like iTunes have been welcomed more openly by HBO and Time Warner Cable, in part because the cost discourages cord-cutting and because it theoretically makes more revenue from those who do pay.

by MacNN Staff



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