How Amazon and Roku impacted HBO Max so far
AT&T (NYSE: T) revealed some early numbers for HBO Max during its second quarter earnings call. The company launched the extended streaming service at the end of May, and as of June 30, 4.1 million homes have activated the service. Most signed up directly through hbomax.com or through an in-app purchase, while about 1.2 million activated their accounts through AT&T bundles.
While AT&T management says it is satisfied with its initial results, it cannot rejoice at the 5.9 million households still subscribed to HBO without access to HBO Max.
The main reason why so many homes can’t access HBO Max is because AT&T can’t make a deal with Amazon (NASDAQ: AMZN) Where Roku (NASDAQ: ROKU) for their connected television platforms. Most, if not all, of those 5.9 million subscribers signed up for HBO through Amazon Channels or Roku Channel.
CEO John Stankey specifically called Amazon on AT & T’s second quarter earnings call. “Unfortunately, Amazon has taken an approach of treating HBO Max and its customers differently than they’ve chosen to treat other services and their customers,” he said.
Amazon still has the upper hand
Earlier this year, Amazon said it has around 5 million paid HBO subscribers through its Amazon Channels service. This gives it considerably more than the 4.1 million subscribers actively using HBO Max and represents a significant portion of AT & T’s total HBO subscriber base. If AT&T wants to significantly increase the activations of its new service, Amazon holds the keys.
But Amazon doesn’t offer the kind of engagement AT&T wants. Amazon wants to keep HBO subscribers within the channel ecosystem. This gives it access to viewer data and the ability to engage users with additional content outside of HBO. Roku is seeking a similar deal with its Roku Channel offering. AT&T wants Amazon to send users to the dedicated HBO Max app, where it can more tightly control data and user experience.
AT&T believes it is entitled to the same types of agreements as its predecessors such as Disney (NYSE: DIS) has received. But Amazon and Roku didn’t have 5.9 million Disney + or Hulu subscribers on their respective channel products. Investors should remember Disney and Amazon did not agree to the terms until the last minute before the launch of the service.
Amazon may have been prompted to strike a deal with Disney by the extremely positive quick response at Disney +. The first response to HBO Max was much more subdued. AT&T added less than 3.7 million non-commercial subscribers to HBO in the second quarter and only 4.1 million HBO Max activations.
AT&T is getting in its own way
AT&T could have far more to gain than to lose by licensing HBO Max as an Amazon Channel or Roku Channel subscription option. Over 22 million HBO subscribers still haven’t activated HBO Max despite paying through their pay TV provider.
Stankey says the shortfall is due to a lack of consumer education. “We still have work to do to educate and motivate the exclusively linear subscriber base,” he said. “We will continue to work with our wholesale partners to increase these activation rates.”
But given that Amazon and Roku account for around 70% of the smart TV market, it’s more likely that not having an app on either platform is holding back activations. . If AT & T’s primary goal is to get more people to use HBO Max and collect data on the viewing habits of those users, then it has a lot more to gain by sacrificing a fraction of its viewing data to Amazon or Roku.
Amazon and Roku are proving how big an impact they can have on the success of a service like HBO Max. Given that 5.9 million subscribers have not been motivated to change their subscriptions to access HBO Max, and 22 million more do not bother to activate their subscriptions, we can see the interest to have an application on the main connected television platforms. . Media companies who think they can do without a deal with Amazon or Roku are deluding themselves.
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