Updated from 9:30 a.m. to include information about upgrades at the end of the story.
NEW YORK (TheStreet) -- Time Warner (TWX) isn't worried about whether a stand alone HBO will prompt pay-TV subscribers to cut the cord, or whether other networks will do the same. The decision, announced Wednesday, to offer the entertainment company's popular HBO network as a stand-alone subscription service sometime in 2015, is all about Netflix (NFLX) .
In a decade, Netflix has gone from being an aggregator of movies and television shows to an aggressive buyer of original programming, an enormous transition. It's also the same path HBO followed as it became the foremost producer of high-quality television serials.
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Netflix's steady revenue stream has given CEO Reed Hastings plenty of cash to get into original programming. The success of House of Cards and Orange is The New Black speaks to Netflix's financial prowess, and its aspirations. Don't forget, on any given evening in the U.S., Netflix accounts for more broadband usage than any other service, and that includes Google's (GOOG) YouTube.
At Time Warner's investor conference Wednesday, HBO CEO Richard Plepler repeatedly rejected the notion that an HBO stand-alone service will cannibalize pay-TV. The decision to go "over-the-top," the industry term for set-top boxes that stream video to the television, Plepler said, is all about going after the 10 million U.S. homes that have an Internet connection but don't subscribe to pay-TV. It's about going after the additional 70 million homes that get pay TV but don't get HBO.