By Joe Flint and Lillian Rizzo
HBO Max was absent from the nation's two largest streaming
players when it launched Wednesday, the result of increasingly
frequent clashes between streaming services and distributors in an
era where many actors are also direct competitors.
AT&T Inc.'s WarnerMedia unit has yet to reach a deal with
Amazon.com Inc. and Roku Inc. -- which control 70% of the U.S.
streaming-media player market, according to Parks Associates -- to
make HBO Max available on hardware including Amazon's Fire TV Cube
and Fire TV Stick as well as Roku-powered smart TVs and
devices.
Amazon also has about 5 million customers who access HBO through
its Prime Video Channels platform but aren't able to access HBO
Max, despite the fact that the service was to be made available
free of charge to all 33 million existing HBO subscribers in the
U.S. starting Wednesday. Amazon Prime Video users who want HBO Max
would have to drop HBO from Prime Video Channels and subscribe
directly to the new service.
"AT&T is choosing to deny these loyal HBO customers access
to the expanded catalog," Amazon said. "We believe that if you're
paying for HBO, you're entitled to the new programming through the
method you're already using. That's just good customer service and
that's a priority for us."
A spokesman for AT&T's WarnerMedia unit said the company was
looking forward "to reaching agreements with the few outstanding
distribution partners left, including with Amazon and on par with
how they provide customers access to Netflix, Disney+ and Hulu on
Fire devices."
HBO Max also wasn't available to cable giant Comcast Corp.'s
existing customers when it launched, but both companies reached an
agreement Wednesday morning to give Xfinity cable and internet
customers access to the new service.
Disputes between streaming services are getting increasingly
frequent and complicated because of the changing power dynamics of
the streaming era. HBO Max parent AT&T also owns pay-TV
services including DirecTV and internet-based live-TV bundles;
Amazon offers streaming devices and the Prime Video streaming
service; so does Apple Inc. with Apple TV (the device) and Apple
TV+ (the service); Comcast, whose Peacock streaming service will be
available broadly this summer, is also the nation's largest cable
operator with nearly 21 million video customers.
In many ways, such clashes are akin to the fights that
traditional cable networks often have with cable and satellite
operators. Walt Disney Co. and Amazon disagreed over terms
regarding Disney+ only to reach an accord in time for that
service's launch last November.
The latest entrant into the so-called streaming wars, HBO Max is
entering a crowded battlefield and might face challenges gaining
traction against more established platforms such as Netflix Inc.,
Disney+, which has gotten off to a strong start, and Amazon's own
Prime Video. In July, Comcast, will roll out Peacock to the
nation.
The service, which includes new original programming as well as
all of HBO's content and old TV shows and movies from the Warner
Bros. library and elsewhere, costs $14.99 a month, making it more
expensive than practically all of its competitors. It does have a
vast library of classic movies as well as plenty of animation and
children's content.
At the center of the dispute between Amazon and WarnerMedia is
that WarnerMedia wants Amazon to shuttle subscribers to the HBO Max
platform as it does with Netflix and Disney+ customers. Amazon
wants to house the HBO Max content on Prime Videos Channels as it
currently does with HBO.
Essentially, AT&T wants Amazon to serve as a toll road to
HBO Max instead of providing housing for it. Such an arrangement
would make it easier for AT&T to track consumption habits and
other valuable data about its customers and establish a direct
relationship.
The row with Roku, a connected-television platform that serves
as a gateway to streaming services and powers many smart TVs,
centers around more traditional issues -- revenue sharing and
advertising, people familiar with the matter said.
Typically, Roku takes a cut of a service's subscription fees and
gets to sell ads in return for distribution. There are disputes on
both those fronts with HBO Max, which next year will introduce an
ad-supported version of the platform.
Roku said it had 39.8 million active accounts at the end of the
first quarter, a 38% increase from the same period last year. In
2019, just under 1 in 3 smart TVs sold in the U.S. were Roku TVs,
Chief Executive Anthony Wood said in an earlier earnings call.
Meanwhile, Amazon said it had more than 40 million Fire TV active
users globally as of Dec. 31.
Roku controlled 38% of the U.S. streaming-player market as of
the first quarter of this year, ahead of Amazon's 32%, Apple's 13%
and 9% for Chromecast, a player made by Alphabet Inc.'s Google,
according to Parks Associates, a research firm.
"As the No. 1 streaming platform in the U.S., we believe that
HBO Max would benefit greatly from the scale and content marketing
capabilities available with distribution on our platform.
Unfortunately we haven't reached agreement yet with HBO Max," Roku
said.
The standoff in negotiations between Comcast and HBO Max that
was resolved Wednesday morning centered on increased pricing for
the streaming version of the premium channel, according to people
familiar with the matter.
Comcast was once one of HBO's biggest distributors with roughly
50% penetration, a person familiar with the matter said. Now, that
number has dropped to less than 30% of Comcast customers that
subscribe to the service, the person added.
HBO has around 33 million U.S. subscribers, a number that has
been relatively flat in recent years, and is hoping to build on
that with the broad array of content on HBO Max. Globally, HBO has
140 million subscribers, a number that also includes sister channel
Cinemax. Disney+ recently said it reached 50 million global users
in the few months since its launch. Netflix reported 182.9 million
customers world-wide in the first quarter.
For Comcast and its Peacock streaming service, HBO Max now poses
more of a threat as a competitor than just an add-on to the cable
bundle.
In some cases, distributors have been able to leverage
concessions from AT&T in return for agreeing to offer HBO Max.
Charter Communications finally landed a carriage deal on AT&T's
DirecTV for the Los Angeles Dodgers channel it distributes for the
team in return for an HBO Max pact, people familiar with the
situation said.
Other providers that have signed on to carry HBO Max include
Altice USA Inc., Cox Communications Inc., and Verizon
Communications' Fios TV.
Write to Joe Flint at joe.flint@wsj.com and Lillian Rizzo at
Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
May 27, 2020 19:59 ET (23:59 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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