Netflix said a month ago that it sees HBO as its chief rival. And it appears that HBO agrees, as the company confirmed on Thursday that it had decided to stop selling DVDs to Netflix at a discount.
Netflix typically buys the film and TV show DVDs that it rents to customers through wholesale venues, thereby taking advantage of volume discounts. But from now on, Netflix will have to buy DVD sets of shows like “True Blood” and “Boardwalk Empire” at retail in order to rent them to customers.
It’s not a huge financial hit to Netflix, but it is a signal about what the competitive landscape looks like. Asked about the change, a Netflix spokesman said, “Netflix will continue to provide HBO titles on DVD and Blu-ray to our members.”
The change was believed to have taken effect on Jan. 1.
Netflix firmly believes that its future is in the streaming video business, not the DVD-by-mail business. But it still has millions of customers that want DVDs by mail, and it has pledged to keep serving them.
On the streaming video side, Netflix does not have the rights to stream HBO’s TV shows or the films that HBO televises. That content is available through HBO’s own streaming service, HBO GO.
Referring to streaming, the Netflix chief executive Reed Hastings said last month, “I think the two of us will compete for a very long time; hopefully we’ll make ourselves both better through that competition.”
Showing off the growth of streaming despite an unpopular price hike, Netflix said earlier this week that in the last three months of 2011, it served up “more than two billion hours” of TV and film streams.
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