A combination of anticipated competition from a new streaming service from Time Warner Inc.’s (NYSE: TWX) HBO and poor earnings have driven Netflix Inc. (NASDAQ: NFLX) down 25% in premarket trading.

Netflix numbers were well below what was anticipated, particularly in subscriber growth:

Last quarter we added over 3 million members, ending Q3 with 53.1 million global members and $1.22 billion in revenue. We are forecasting adding another 4 million members in Q4, ending 2014 with over 57 million global members.

Wall Street expected Netflix would add nearly 4 million subscribers in the third quarter.

The comment that triggered the most damage:

Separate from forecast variability, year on year net additions in the US were down (1.3 million in Q3 2013 to 1 million in Q3 2014). As best we can tell, the primary cause is the slightly higher prices we now have compared to a year ago. Slightly higher prices result in slightly less growth, other things being equal, and this is manifested more clearly in higher adoption markets such as the US.

However, there was a silver lining:

Operating income nearly doubled y/y to $110 million despite our investment in international expansion.

Time Warner’s financial heft and the HBO brand and content library could put substantial dents in Netflix growth.

Richard Plepler, chairman and CEO of HBO, commented:

That is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO.

So, in 2015, we will launch a stand-alone, over-the-top, HBO service in the United States. We will work with our current partners. And, we will explore models with new partners. All in, there are 80 million homes that do not have HBO and we will use all means at our disposal to go after them.

And this business is crowded particularly by Apple Inc. (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN), which also have powerful brands and distribution channels set by their products and services.

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