Amazon-HBO Max Deal Signals Power Shift in Streaming

When HBO Max departed Amazon’s Prime Video Channels platform in September 2021, executives reasoned that the decision, which would lose them 5 million subscribers, was worth it to have direct relationships with all of HBO Max’s users.

“It’s important for us to own the customer,” HBO Max then-general manager Andy Forssell told Bloomberg at the time. “If the viewer is in the app, we can tailor the homepage to them. We can tailor what they show them next. We can respond to that in real time.”

Just over a year and one merger later, HBO Max has returned to Prime Video Channels, the streamer announced Tuesday. The reversal is indicative not just of a strategic shift under a new corporate parent but of the changing direct-to-consumer landscape.

It’s become clear over the past several months that streamers need new strategies to continue substantial growth in the crowded, mature domestic market. This has led to much talk of renewed bundling, a return to something resembling the pay TV model that offered numerous channels in a single package.

Streaming bundles have been limited so far, with services understandably loath to be sold alongside rivals. But the demand for a streamlined subscription package is becoming ever more palpable.

In a recent survey conducted for e-commerce tech firm Bango, 72 percent of respondents — all U.S. subscription users — said there are “too many subscription services” currently on the market. Nearly 80 percent said they want a single platform to manage all of their subscriptions or want the ability to pay for multiple subscriptions through one monthly bill.

There is a growing field of aggregators rising to meet this demand, offering multiple third-party streaming platforms through a single integrated interface and billing system. Prime Video Channels, which offers services such as Paramount+, Starz and AMC+ as add-on subscriptions through Amazon’s streaming platform, is just one example.

Apple also offers some services as “channels” that can be purchased and viewed within the tech giant’s TV app and billed through Apple. Alphabet’s virtual MVPD YouTube TV and new aggregation service Primetime Channels offer similar options.

There are trade-offs to this system, of course. Amazon, for instance, reportedly takes a 30 percent cut of subscription fees paid through Prime Video Channels and is selective about the user data it shares with third-party services (another sticking point in the HBO Max relationship). But for some services, the incremental reach and revenue aggregators can offer are worth that cost of doing business.

“We continue to believe in broad and ubiquitous distribution as a path to scale, and that includes wholesale relationships, including with [Amazon],” Paramount CEO Bob Bakish said on an earnings call last year. (He would not disclose how many subscribers Paramount has through Prime Video Channels.)

For other services, however, this prospect is less enticing. With its 95 million global subscribers, Warner Bros. Discovery’s streaming portfolio — HBO, HBO Max and Discovery+ — is the largest U.S.-based DTC operation currently available via aggregators. (Prime Video Channels carries Discovery+ as well, while HBO Max is also available as a standalone or add-on subscription through YouTube TV.) The biggest players on the market, Netflix and Disney, continue to resist it.

There is a logic to doing so. Prime Video, Apple TV+ and YouTube are all major competitors for consumers’ time and attention. For Netflix and Disney, who have made it this far without aggregation, bundling their services with rival operations would be a nonsensical move until their subscriber growth stalls out completely.

That moment seems a lot closer than it did just a year ago, however. Netflix lost domestic subscribers in two back-to-back quarters this year and added just 100,000 in Q3. Disney+ has fared better; it picked up 1.9 million domestic subs in Q3 and has yet to see its growth reverse in any major market. But that growth is slowing in the domestic sphere, and analysts are questioning how many more customers Disney+ can pick up without a major shift in its content strategy.

And even the biggest players are not immune to market trends. Verizon is at work on Plus Play, a subscription service hub for its customers, which is set to feature major streamers including, yes, Netflix and Disney+, as well as HBO Max and others.

Streamers are undoubtedly more eager to participate in aggregation with a company that is not competing with them in the SVOD game. But the tide is only gathering strength: service aggregation is poised to become a major business in the years ahead, as consumers’ frustration over subscription juggling is unlikely to abate.

Just last week, at the New York Times DealBook Summit, Amazon CEO Andy Jassy laid out a vision for Prime Video to become “the center of the entertainment universe,” per the Hollywood Reporter, both producing its own content and providing every other platform through Channels.

“Customers would like to go to a place and find everything they want, they don’t want to go to five or six different places,” Jassy said.

That can’t be denied. How much longer it can be resisted, even by streaming’s biggest giants, is anyone’s guess.