April 24, 2014
In a first of its kind deal for Time Warner’s HBO, the premium cable channel has agreed to license older episodes of its programming to Amazon Prime’s subscription streaming service. The agreement is the first such HBO deal with an online video provider, and will make original series such as “The Wire” and “The Sopranos” available for online streaming. Prior to this deal, HBO shows were only available for digital purchase through Amazon or Apple’s iTunes, or via rental services such as Netflix.
“The deal, announced on Wednesday, deepens the commitment of Amazon and its chief, Jeffrey P. Bezos, to the tough but potentially lucrative television market, while escalating its competition with Netflix and other competitors offering programming over the Internet,” reports The New York Times.
“The agreement, which goes into effect next month, is significant for Amazon Prime, bolstering its library of past content,” adds The Wall Street Journal. “Amazon has been seeking to boost its Prime offerings after raising the price in March of the unlimited shipping and streaming video service by $20, or 25 percent, annually.”
Specific terms of the deal have yet to be disclosed. However, its exclusivity suggests HBO cannot strike a similar pact with streaming competitors such as Netflix or Hulu. HBO’s subscriber demand is protected since shows will not be made available via Prime Instant Video until three years after their original broadcast dates on HBO.
WSJ notes that “Game of Thrones,” “Sex and the City,” “Entourage” and “Curb Your Enthusiasm” are excluded from the deal. HBO Go will also be available on Amazon’s new Fire TV streaming device.
“The arrangement with HBO may cost Amazon more than $200 million annually, based on the terms of other similar deals, estimated Wedbush Securities analyst Michael Pachter. He said Amazon would likely offer 800 episodes of HBO content to start and could eventually have more than 2,000,” explains WSJ.
“The upside for Amazon in this deal is clear: It gets a big, shiny brand it can use to set itself apart from the competition. It could also work well for HBO, and may even help the company market itself to nonsubscribers,” writes Peter Kafka for Re/code. “The danger for HBO is that it may teach nonsubscribers — and perhaps some current subscribers — that they don’t need to pay for an HBO subscription (and, perhaps, a TV subscription at all) if they’re willing to be patient.”