HBO says it will no longer sell discounted DVDs of its shows to Netflix; move designed to encourage consumers to subscribe to HBO's online viewing service

Cindy Allen

LOS ANGELES , January 6, 2012 (Associated Press) – HBO fired a shot across Netflix's bow this week, confirming it will no longer sell discounted DVDs of hit shows like "Boardwalk Empire" to the subscription video service.

The move by Time Warner Inc.'s pay TV channel is more antagonistic than damaging. Netflix Inc. can maintain its mail-order movie rental offerings by buying HBO discs from other sources — even retail stores. "Netflix will continue to provide HBO programming on DVD and Blu-ray discs for our members," spokesman Steve Swasey said in a statement.

Still, HBO's jab heightens the growing rivalry between the companies.

In December, Netflix CEO Reed Hastings told an investors conference that HBO's online viewing service, HBO GO, was "the competitor we fear the most." He noted that consumers with good incomes can afford to both services, but when money is tight they may be forced to choose just one.

Time Warner CEO Jeff Bewkes has belittled Netflix, telling The New York Times just over a year ago that it was like "the Albanian army going to take over the world."

HBO has consistently refused to license its hit shows to Netflix's online streaming service. The decision to also halt bulk disc sales to Netflix is intended to encourage those who want to watch HBO's shows to subscribe to HBO.

"We believe in exclusivity," HBO spokesman Jeff Cusson said.

Netflix offers online streaming of movies and TV shows for as little as $8 a month, but some content providers such as Sony Corp. have pulled movies for fear of damaging their relationships with traditional TV distributors, who offer packages of channels for $100 a month or more.

The Starz pay TV channel, which carries movies from Sony and The Walt Disney Co., has said it will pull its movies from Netflix's streaming plan in March. That move is the result of a fee dispute between the companies.

Netflix had about 23 million streaming customers as of September, while HBO has around 29 million pay TV customers.

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