One of the more immediate effects has to do with HBO's relationship with Netflix. While HBO's latest move highlights more than ever how the two companies are head-to-head competitors, it's just as likely they'll find themselves sharing common interests over the long run.
That's particularly true on questions of policy, regulation and dealings with broadband providers. Standalone HBO Go isn't some side project; it's HBO's play for a vast segment of the population.
"There are 80 million homes that do not have HBO," said Richard Plepler, HBO's chief executive, "and we will use all means at our disposal to go after them."
Simply by being in the same business puts HBO Go and Netflix in similar positions. Take the thorny question of interconnection. When Netflix agreed to pay Comcast, Verizon and AT&T to connect directly to their networks, it was because Netflix was sending a ton of data over the Internet and ultimately through the ISPs' pipes. This was something HBO never had to worry about, because the people using HBO Go were already cable customers, and the cost of providing HBO content over the Internet to them was already reflected in their cable bills. Now, depending on how much data HBO winds up sending to non-cable subscribers, HBO might someday have to start making interconnection payments just like Netflix does. And even if that future doesn't pan out, this is at least a possibility HBO will need to consider for the first time.
Netflix senses — correctly, probably — that video streaming stands to gain immensely from having HBO enter the market.
"It was inevitable and sensible that they would eventually offer their service as a standalone application," Netflix chief executive Reed Hastings and chief financial officer David Wells said in an investor letter Wednesday. "Many people will subscribe to both Netflix and HBO since we have different shows, so we think it is likely we both prosper as consumers move to Internet TV."
Of course, HBO enjoys a much cozier relationship with broadband providers than Netflix does, because some of those broadband providers are cable companies that have existing deals with HBO for its content. In that respect, HBO Go has a major advantage. Thanks to what we'll call Big HBO, the standalone HBO Go will have some extra pull that Netflix doesn't have. To preserve that relationship with cable providers — which would be threatened if cable viewers took this opportunity to cut the cord — HBO was quick to add that it still saw "significant growth opportunities inside the pay-TV universe."
Even those distinctions between HBO Go and Netflix are likely to blur when it comes to regulators who are knee-deep in trying to develop policies for the broadband age. Until now, HBO was chiefly concerned with how cable TV was regulated. But as HBO Go stands up its online services, it'll have a growing stake in how the Internet and its underlying infrastructure are governed.
Netflix has famously observed that its goal is to become HBO faster than HBO can become Netflix. The two companies may be at odds when it comes to doing business. But in terms of interests — especially on policy and regulation — the two are becoming more alike than it may seem.