HBO and Netflix Went to War and Remade TV

Streaming television’s defining rivalry began with an insult and a sneak attack. An exclusive adaptation from It’s Not TV: The Spectacular Rise, Revolution, and Future of HBO

- Felix Gillette and John Koblin

Jeffrey Bewkes scanned his mind, searching for the perfect war metaphor. It was December 2010. Bewkes, the tall, dry-witted CEO of Time Warner Inc., one of the largest, most powerful media conglomerates on the planet, was speaking with the New York Times. The topic: Netflix Inc. On Wall Street and in the media, people were gushing over the disruptive potential of the California upstart. Just recently, Time Warner's top business magazine, Fortune, had named Reed Hastings, the CEO of Netflix, as its Businessperson of the Year.

Bewkes, who had spent the formative years of his career working as an executive at HBO-Time Warner's prized, premium cable network-was less taken by the Netflix hype. "It's a little bit like, is the Albanian Army going to take over the world?" he said. "I don't think so." The shot at Netflix ricocheted through the industry. Back at HBO, some of the younger managers pored over Bewkes's comments with dread. "As an executive at HBO, I physically cringed when I read that quote," says Jamyn Edis, a former vice president of HBO's consumer technology group. "The sheer level of pride and arrogance that would allow our company's leadership to gracelessly and ignorantly dismiss a competitor out of hand-I knew then that our transformation to a digital company was going to be a bloody campaign."

The Albanian rimshot also signaled something bigger: a broad realignment of Hollywood power that was already afoot. The whole industry was on a precipice, and the days that legacy media companies could casually dismiss Netflix were about to give way to a new era where they scrambled to mimic its strengths. The defining conflict of this era would pit HBO against Netflix. During the days of DVDs, the relationship was a placid collaboration.