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HBO Max ad-supported tier adds extra wrinkle in Roku, Amazon negotiations

The cheaper HBO Max plan supported by commercials adds an extra layer of problems when it comes to negotiations between AT&T, Roku and Amazon.

The cheaper HBO Max plan supported by commercials adds an extra layer of problems when it comes to negotiations between AT&T, Roku and Amazon.

HBO Max, where the “Max” stands for “Maximum confusion.” (Image: WarnerMedia/AT&T/Handout, Graphic: The Desk)

A cheaper, advertisement-supported version of AT&T’s streaming service HBO Max will launch sometime next year, according to a report.

The information came from a wide-ranging interview conducted by trade publication The Wrap with Jason Kilar, the chief executive of AT&T subsidiary WarnerMedia.

Kilar spoke about recent difficulties in bringing HBO Max to users of Roku and Amazon Fire devices, two of the most-popular streaming television platforms in the world.

“For me, [it] comes down to pure economics, which really is what our focus is, which is to be treated just like Netflix or Hulu are treated,” Kilar said.

In other words, AT&T is hoping for the same type of distribution agreements with Roku and Amazon that Netflix and Disney-owned Hulu enjoy.

But two problems exist for AT&T that so far have kept it from enjoying those types of deals: Before rolling out HBO Max in April, the company had agreements with both platforms to distribute HBO’s original programming and licensed movies through Roku and Amazon’s native offerings.

For Roku, that offering is The Roku Channel, where Roku sells HBO subscriptions directly to users, then keeps a portion of the subscription fee as a commission. Amazon’s deal with AT&T involves selling subscriptions through Amazon Prime Video Channels for a similar commission. Netflix and Hulu have never entered a similar agreement with either platform.

Roku and Amazon expect AT&T to honor the terms of its original agreement, which ostensibly requires AT&T to distribute HBO Max’s expanded library content through Roku and Amazon’s native offerings. AT&T has allowed some platforms, including Hulu and Google-owned YouTube TV, to give HBO Max access to subscribers while keeping the expanded library of content exclusive to the HBO Max app.

The second problem involves the forthcoming ad-supported version of HBO Max. Roku and Amazon allow ad-supported apps like Pluto TV, Tubi TV and Xumo to exist on their platforms, but require those services to make a small amount of ad inventory available to Roku and Amazon.

That issue has created complications for Comcast’s streaming service Peacock, which remains unavailable to Roku and Amazon users nearly a month after launching. A source said in late June negotiations between Comcast and Roku were hanging on how much ad inventory would be allocated for Roku’s use on Peacock’s two ad-supported tiers.

The same issue is apparently playing out between AT&T and the platforms with respect to HBO Max’s anticipated ad-supported tier, The Wrap said last week.

AT&T’s insistence on its distribution terms means Roku and Amazon users are more likely to see Comcast’s Peacock land on the platforms before HBO Max.

In late July, Amazon chief executive Jeff Bezos said he was not personally involved in negotiations between his company and AT&T, but he believed a deal would eventually be reached to bring HBO Max to Amazon Fire TV and tablet users.

Separately, representatives of AT&T, Comcast and Roku confirmed negotiations between their companies continue.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).