Amazon’s agreement with AT&T over its Amazon Web Services cloud storage and services business was used as a bargaining chip as both companies were negotiating terms for distribution of HBO Max to Amazon’s Fire TV customers, according to a new report.
Silicon Valley scoop machine The Information said on Friday that one of the elements to seal a deal between Amazon and AT&T’s WarnerMedia entertainment subsidiary was an existing agreement by WarnerMedia to use Amazon Web Services for some of its products.
Prior to HBO Max’s launch, Amazon distributed HBO programming through its Amazon Prime Video Channels service, which allowed Amazon customers who use Prime VIdeo to subscribe to HBO directly through the app. Amazon received a commission of all HBO subscriptions sold through Prime Video, and the company was hesitant to forego this deal in exchange for providing HBO Max to users, which AT&T wanted to sell to customers directly.
A similar holdup kept HBO Max off Roku’s platform, The Desk reported exclusively last summer. AT&T was willing to offer Roku the ability to sell HBO Max subscriptions natively through its Roku Channel service, which functions similarly to Amazon Prime Video Channels, if Roku agreed to lower its commission of each subscription sold. Roku said no. Both sides came to an agreement on that issue in December: Roku now earns a commission — albeit a smaller one — when customers sign up for HBO Max through AT&T’s app using the platform’s native payment processing feature Roku Pay.
Concessions also played a factor in Amazon and AT&T’s negotiations for a deal, according to The Information. In addition to an extension of WarnerMedia’s contract for Amazon Web Services, The Information said the company’s agreement includes allowing Amazon to sell Warner Bros. titles for rent through its online marketplace, and Amazon agreed to allow its deal to distribute HBO content natively through Prime Video Channels later this year.
Reporter Jessica Toonkel speculated the deal was likely pushed forward by an existing personal relationship between an executive at each company: Andrew Jassy, the chief executive of Amazon Web Services, and AT&T WarnerMedia chief executive Jason Kilar were acquaintances at Harvard Business School in the mid-1990s, according to her scoop. Toonkel said sources familiar with the negotiations said Kilar became personally involved when negotiations were taking place between his company and Amazon for distribution of HBO Max on Fire TV devices.