Time Warner released numbers for HBO today for the first time, revealing that the network generated $1.3 billion in revenue in the last quarter of 2013, and $4.9 billion for the whole year. Those are the numbers of a very healthy business, and that's why Time Warner decided to publish them, citing "transparency into the business."
"HBO remains in a league of its own," Time Warner CEO Jeff Bewkes reportedly said on the company’s earnings call. "We don’t see any discernible effect on HBO’s subscriber numbers or pricing because of Netflix or other internet video subscription services."
Bewkes was hoping to reassure investors that internet video isn't a threat, but the takeaway seems to be just the opposite. HBO had a record year, and its numbers look much better than Netflix's right now. Its operating margins are almost five times better than Netflix's, and it has almost three times as many global subscribers and a robust business in retransmission fees. There is no disputing that HBO is significantly more profitable than Netflix.
HBO is way more profitable than Netflix, but Netflix is growing much faster
Netflix, however, is growing much faster. It generated almost as much revenue as HBO in the last quarter of 2013 — $1.2 billion for the quarter — from a much smaller user base, and it's closing the gap on the annual revenue as well, with $3.75 billion for the year. Netflix is also aggressively expanding around the world, recently taking out a $400 million loan to invest in original content and the European market, and gained as many new US subscribers in one quarter as HBO gained in a year. Time Warner may want you to believe otherwise, but this is a story of Netflix rising.