HBO (NYSE:TWX) isn’t going to be a pushover after Netflix (NASDAQ:NFLX) grabbed up exclusive rights to Disney’s (NYSE:DIS) live-action and animated content. A recent deal between HBO and Universal will give the cable channel exclusive rights to show Universal’s (NASDAQ:CMCSA) content on TVs, mobile devices, and online.
Netflix has shown a fair bit of fight the past few years as it snatched up massive audiences with its in-home streaming services, which put vast collections of movies and TV programs at the fingertips of viewers instantly. When Netflix signed an exclusive content deal with as big a company as Disney, it was clear that Netflix was something cable channels had to contend with. HBO already has a strong content arsenal, with Fox (NASDAQ:NWS), Warner Bros, and Summit Entertainment (NYSE:LGF)) already signed into exclusive deals, and adding Universal to the lineup will further help HBO compete.
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HBO’s deal with Universal will likely cost in the ballpark of $200 million per year — about the amount HBO pays for a similar deal with Fox — for the next ten years. The actual value of the deal may depend on the box-office revenue of Universal’s content, but would likely be capped at $200 million per year for all content from Universal.
HBO’s content deals ensure it a strong footing in the future against Netflix’s upsurge in use and popularity. Last October, Netflix detailed the number of subscribers it had, but the numbers were nearly half that of HBO’s 100 million subscribers worldwide. Additionally, Redbox (NASDAQ:CSTR) has recently risen in direct competition to Netflix, and could make the fight that much easier for HBO to win.
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