Retail and technology giant Amazon has added premium channels HBO and Cinemax to its Amazon Channels line-up in the US. Subscribers to Amazon Prime, the company’s free shipping and digital-services bundle, can now subscribe to HBO for an additional $14.99 a month and Cinemax for $9.99 a month.
The addition of HBO and Cinemax to Amazon Channels (previously known as Amazon Streaming Partners) means that Prime members will be able to access a comprehensive premium entertainment offering within the Prime ecosystem. Amazon Channels now boasts more than 80 video-streaming services, including Showtime and Starz.
Amazon has a history with HBO, having made selected series such as The Sopranos and True Blood available to Prime subscribers in April 2014. The deal, which is still active, only included content that was a minimum of three years old.
Amazon continues to assemble a pay TV offer, channel by channel. The strategy is typical of the company, which has a track record of launching products in a relatively bare-bones state and then iteratively improving them. As such, it seems likely that Amazon will be offering a more full-featured pay TV service in the near future. The service that emerges from this process may well look very different to traditional pay TV bundles, as it is being built around the company’s Prime offering, which has the ultimate purpose of driving sales for Amazon’s ecommerce business. But it is looking increasingly likely that Amazon is en route to directly competing with the likes of established pay TV providers Comcast, AT&T et al.
For the avoidance of doubt, IHS Markit does not believe that the addition of HBO and Cinemax to Amazon Channels will directly impact the number of Amazon Prime subscribers in a meaningful way. The channels are already widely available both via pay TV and, in HBO’s case, as a standalone online offer. Rather, the addition of HBO is an important move because it further legitimises Amazon Channels for consumers and other TV channels, and helps to solidify the foundation for a more full-featured TV offering from Amazon by both driving video consumption and setting the stage for more channel deals in the future.
It is likely that HBO and Cinemax will enjoy a boost in subscribers as a result of joining Amazon. Starz, for instance, had nearly 1 million subscribers spread across its own online services and Amazon Channels at the end of October 2016, and the company has credited Amazon for helping it to grow its business. By contrast, a pre-Amazon HBO was reported as having a little more than 1 million subscribers to its online offer at the start of December. On traditional pay TV platforms Starz has approximately 70% of HBO’s subscriber total, but online the channels appear to be much more closely aligned and the lack of Amazon support for HBO (until now) is likely to be a contributing factor to this.
Deal terms have not been disclosed. But with Starz, Amazon is known to have struck a wholesale deal for the channel (like a traditional pay TV company) rather than a revenue-share agreement that is more typical for app-store TV services, such as those of Apple and Google. Similarly, customers who subscribe to Showtime via Amazon Channels have access to Showtime’s ‘TV Everywhere’ services, which conventional pay TV customers can use to gain multiscreen access to the channel. In both cases, the agreements reflect a traditional pay TV, rather than app-centric, approach.