Credit: Shutterstock photoMake no mistake, when it comes to Time Warner (TWX) and Netflix (NFLX), the two companies are at war -- for talent, shows, investor attention, and for how they each do business. With Time Warner's just announced stake in Hulu, the company upped the ante in its fight, as well as looking to the future of the cable bundle.
The media world is being disrupted drastically, thanks to Netflix to Amazon (AMZN). New York-based Time Warner is fighting as it seeks to keep its gold standard subscription HBO in the limelight, as it now offers the channel over the top with HBO Now, which recently surpassed 1 million subscribers, according to a recent Bloomberg interview with CEO Jeff Bewkes.
HBO Now has had a bit of a slow start, but it looks to be gaining traction, as it's constantly ranked in the top 10 highest grossing apps in the App Store, demonstrating that consumers who don't want to pay for cable are willing to pay $15 a month for good HBO content.
However, the 10% purchase of Hulu, which came at a price of around $600 million, may ultimately be more important, as it not only gives it a financial stake in a Netflix and Amazon Video competitor, but it's putting TNT, TBS, CNN, Cartoon Network, Adult Swim, truTV, Boomerang and Turner Classic Movies on Hulu's live TV service (very similar to Dish's Sling TV, which also includes Time Warner channels), which is slated to launch next year.
There's been a lot of chatter in the media world about "skinny bundles" and over the top bundles, as people look to cut the cost of their cable bills. With Time Warner putting all of its channels on the upcoming Hulu service, it effectively gives it more leverage when negotiating with other services, as well allowing it to fight and pay for good content for its non-HBO channels.
It should also alleviate some investor concern that its channels -- namely anything past TBS, TNT and CNN -- are worth less outside of the cable bundle than they are in it and aren't wanted by consumers and will get shut out as the cable bundle continues to change size and shape, as well as cost. (Hulu's new service will likely cost around $40 a month).
Hulu's service is different than Sling and more like what Amazon is doing with its add on subscriptions for channels like Starz and Encore to Amazon Prime, in that the package is being created by the ones who actually make content. (Hulu is also owned by Disney, Fox and NBCUniversal, which owns a passive stake in the company).
Let's face it -- if you're an actor/actress, you want to do great work and have that work be recognized by peers and fans. By Time Warner expanding the reach of its non-HBO channels to Hulu, it gives talent another venue for fans to see their work, while allowing them to reap the benefits of moving towards the future.
When it comes to content, be it social media, long-form or short-form, the goal at the end of the day is to get the most eyeballs, so you can either sell advertising against it, subscriptions, or in many cases, both. Netflix has long been taking away time spent from companies like Time Warner, CBS, NBC and others, spending a gregarious $6 billion in 2016 on content -- original and licensed (Time Warner, among others, does license some of its shows to Netflix and Amazon) -- in an effort to win subscribers and mindshare.
By Time Warner taking a stake in Hulu, it's trying to put a halt to that upward trajectory Netflix is on and win back some mindshare for viewers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
