What’s behind the HBO Max-Amazon impasse?
HBO Max is scheduled to arrive in less than two weeks and it still has some major distribution pieces to put in place. The Amazon Fire TV app store might not be one of them.
According to Light Reading, incoming AT&T CEO John Stankey told the audience at an investor conference that HBO Max will be available from virtually all app stores but maybe not Amazon Fire TV. HBO Max has already set several key distribution deals with Charter, YouTube TV, Hulu, Apple and Google.
Launching without support on Amazon Fire TV would leave a major hole in HBO Max’s potential reach. Amazon Fire TV said at CES in January that it had 40 million active users and that figure has almost certainly grown since then.
Source: Fierce Video
The Take
It was discussed last week at the OTT.X Conference and Roundtables that content provider versus distributor negotiations will not only become more common, but more public. The very next day, John Stankey notified investors that HBO Max may not appear on Amazon devices.
So will the companies reach a deal? Yes, we believe so. There is some precedence here.
Last August, Disney announced its device lineup for Disney+ and Amazon wasn’t on that list. The Wall Street Journal reported that that standoff was about advertising, with Amazon apparently wanting to sell a “substantial percentage” of the available ad space on Disney apps, and Disney wasn’t accepting the deal. It wasn’t until November 7, five days before the Disney+ launch that the companies came to an agreement.
What Amazon and AT&T/WarnerMedia are negotiating are two things. The first is the platform tax that Amazon will collect when a new customer signs up for DTC HBO Max via Amazon in-app purchasing. Typical platform tax ranges from 15-30% per subscriber. The second, and biggest thing currently being discussed is how WarnerMedia wants to remain a part of The Amazon Prime Channels business.
As a quick refresher, there are two ways someone can currently sign up for HBO Now (the company’s current OTT offering that will soon be folded into HBO Max) via Fire TV. You can download the DTC HBO Now app via the Amazon App Store and sign up directly or you can add HBO Now as an add-on channel via Amazon Prime. It’s estimated that over 50% of HBO’s current OTT subscribers are doing so via Prime Video, so the ramifications are not to be overlooked.
For Amazon, they have a lot of customers paying them directly for access to HBO Now, not to mention Cinemax Now. Amazon would like to maintain that business.
AT&T/WarnerMedia doesn’t have customer data for over 50% of their OTT subscribers, which is not really a good position to be in. Ideally, they’d like to take a more direct-to-consumer approach by owning the customer relationship and data and insights that come along with it…especially when the company is planning to roll out an ad-supported version of its service next year. For AT&T/WarnerMedia, it’s about direct relationships, data, and higher ARPU.
The stakes on this one are pretty large and will indicate how serious AT&T/WarnerMedia is about direct-to-consumer.
AT&T/WarnerMedia has yet to cut a deal with Roku for HBO Max, however, it should be noted that the AT&T app is back on Roku for the first time since January as the contract between AT&T and Roku ended.
This comes just over a week before the launch of HBO Max, which could signify that AT&T and Roku are working on a broader distribution deal that includes HBO Max.
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