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Netflix Is Nothing Like HBO

Stocks in this article: NFLX TWX VIAB DTV

HBO is an original programming pioneer. It took decades to build. And no matter how eloquently he speaks about the future of television, there's no possible way -- under Netflix's present structure -- Hastings can do what needs to be done to be a meaningful part of it.

Netflix does not have time on its side. Nor does it (short of a buyout or additional fundraising bailouts) have the cash to finance the number of originals -- which would, almost across the board, have to be HBO-level smash hits (we're talking millions and millions of documented viewers) to matter.

I'm not going out on a limb when I say this has not happened with Netflix's pseudo-originals to this point and it's not going to happen anytime soon, if ever.

Lost in the false hype over "Arrested Development" is something that actually matters: Viacom (VIAB), a major supplier of Kids TV for Netflix, did not renew its contract with the streamer. Nickelodeon reruns are now absent from Netflix.

This is the type of thing Reed Hastings does not want to discuss.

Netflix's content library, by and large, lives and dies by the mercy of huge media companies such as Viacom. The old guard that -- believe me when I tell you (I talk to these guys!) -- does not want to and will not continue to license content to $8-a-month Netflix. Increasingly, they want to keep it in house. They want control. And, as more and more content owners, exercise this control, claim exclusivity and protect the premium nature of their programming, Netflix is left with scraps and a sparse selection of run-of-the-mill originals.

Hastings likes to paint Netflix as the streaming pioneer. That's hollow self-praise. The old guard knows how to do streaming as well as -- and in many cases better (see, e.g., HBO GO, WatchESPN, DIRECTV's (DTV) TV Everywhere platform) -- than Netflix.

There's just no incentive -- no pressure on their timelines -- to introduce full-boar streaming and/or unauthenticated viewing until they're ready. Why in the world would these guys blow up a model that generates billions of revenue when they own and control the content that keeps consumers locked into their ecosystems, on and offline?

For now, they'll allow Netflix to persist as an add-on. Like a pack of batteries, not even wrapped, attached to the present your kid really wanted for Christmas.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.
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