Netflix aims to bundle HBO, not transform it into Netflix

Netflix is moving faster than HBO ever could in the streaming world, which is why the company is pursuing an acquisition of HBO. But if the deal succeeds, the question arises: will HBO disappear into Netflix, or remain a distinct service?

Last month, HBO chief Casey Bloys addressed reporters and acknowledged what many already accepted: Netflix dominates the streaming market. "Netflix, as the first mover, has become a utility. For consumers, it functions like today's basic cable," he noted.

Yet Bloys emphasized HBOs ongoing value, likening it to its original cable model when accessing HBO required a basic cable subscription. He suggested that audiences still want to enhance their entertainment options, essentially hinting: even if you subscribe to Netflix, HBO is worth adding.

Netflix now seems intent on formalizing that concept: offering Netflix alongside HBO in a bundle. But first, it must finalize its $83 billion acquisition of HBO and the Warner Bros. studio. Once the deal closes, the big question is how Netflix will handle the HBO brand.

During a recent investor call, Netflix executives confirmed HBOs value but provided few specifics. The most plausible scenario is that HBO Max would remain available as a standalone service while Netflix subscribers could access it at a discounted ratea true bundled offering, reminiscent of basic cable + HBO but under Netflix.

Co-CEO Greg Peters remarked, "The HBO brand is powerful for consumers. The offering would be part of our strategy and allows us flexibility in packaging content to maximize value for both users and our assets." While details were vague, the message suggests Netflix will maintain HBO as a premium option rather than fully merging it into its main service.

Some operational questions remain, such as the fate of HBO Maxs lower-budget, high-volume series aimed at broadening its audience. These might eventually migrate to Netflix, which already has a massive general-interest subscriber base. But these are secondary considerations; the core approach seems clear.

Currently, Netflix and HBO could operate as separate services for overlapping yet distinct audiences, which aligns with existing patterns. Industry data shows that 45% of HBO's U.S. subscribers already use Netflix, while only 15% of Netflix subscribers also subscribe to HBO. Internationally, this gap is likely larger, offering HBO a chance to expand its reach through Netflixs 300 million global subscribers.

This strategy echoes the original vision behind Warner Bros. Discovery, the 2022 merger of Time Warner and Discovery Inc., which aimed to combine premium HBO content with more accessible Discovery offerings. That model failed as viewers prioritized prestige series over generic programming, leading investors to consider a sale rather than a merger.

Given this context, its unlikely Netflix will fully integrate HBO into its platform. A more probable path is positioning HBO as a premium add-on that complements Netflix subscriptionsessentially transforming the cable bundle concept for the streaming era.

Author: Ava Mitchell