HBO Max and Peacock faced a variety of challenges by launching in the middle of a pandemic, but there’s still no end in sight to one of their biggest roadblocks: Neither streaming service is available on Roku or Amazon Fire TV, the leading products in the connected TV market.
While HBO Max and Peacock, which are respectively operated by WarnerMedia and NBCUniversal, are available on platforms such as mobile devices, most smart TVs, and online via their own websites, Roku and Fire TV are notable exceptions.
Given the popularity of connected TV devices and Roku and Fire TV’s dominance of that market — research firm Parks Associates estimated that they control around 70 percent of the connected TV market in a 2019 study — HBO Max and Peacock are losing out on a significant number of potential customers. And yet, nearly three months after HBO Max’s launch, there’s still no sign that WarnerMedia is nearing a deal with Roku or Amazon. The same holds true for Peacock, which launched nationally on July 15.
It’s possible that a deal for HBO Max could still be months away — Jason Kilar, WarnerMedia’s new CEO, discussed a handful of topics with Bloomberg in early August and suggested there may be a solution around Christmas when hardware sales would spike. In the interim, the glitzy new streaming services backed by multi-billion dollar conglomerates are still unavailable on two of the nation’s most popular streaming devices. What happened?
A representative from WarnerMedia did not return a request for comment. Representatives from NBCUniversal and Amazon declined to comment. A Roku representative said the company was seeking “mutually positive distribution agreements” in a statement but declined further comment.
The key issues holding up deals center on control of user data and ad inventory, according to industry analysts and sources familiar with the conversations.
“It’s part of a debate over who controls the customer and how much information they get,” Rich Greenfield, an analyst at research firm Lightshed Partners, said in an interview. “Given the increasingly competitive device landscape everyone is looking for new forms of revenue, such as advertising. Who sells the ads and what the shares of the ad inventory are is certainly a major issue.”
For Peacock, ad inventory is a particularly pertinent issue though it’s a topic that will impact HBO Max in the near future as well. While Peacock has an ad-free subscription tier, NBCUniversal has focused its marketing on the cheaper or free ad-supported tiers. Though there is not currently an ad-supported version of HBO Max WarnerMedia is expected to launch one in 2021.
Unlike SVOD-only streaming services, advertising is a key component of Peacock’s business. The ad-supported versions of the streaming service only feature five minutes of advertisements per hour, which allows Peacock to sell its ads at particularly high prices, sources familiar to the conversations told IndieWire. Surrendering control of Peacock’s advertising would undermine the streaming service’s business model and the streaming service has been unable to come to an agreement with Roku on the subject, sources said.
The HBO Max and Peacock holdups are a sharp contrast to Disney+, which was available on Roku when it launched on November 12 and made its way to Amazon’s Fire TVs shortly after. Disney inked a deal with Amazon that required customers to sign up and watch Disney+ programming directly through Disney+, rather than going through the Amazon Channel’s store. The move gave Disney direct control over its customers, their user data and credit card information, which Disney can exploit for targeted advertising.
CNBC reported in July that NBCUniversal and WarnerMedia wanted to ink similar deals with Amazon for their own streaming services and stated their inability to do so was holding up negotiations.
A source familiar with the conversations notes it was frustrating that Disney was able to secure deals with Roku and Amazon Fire TV but noted that because Disney+ is not an ad-supported platform, Disney was likely able to avoid the complications that come from negotiating deals for ad-supported platforms.
The complications that come from negotiating ad-supported platforms aside, Doug Clinton, managing partner of tech VC fund Loup Ventures, argued that Disney may have been in an advantageous position in negotiations by the high level of anticipation for Disney+ leading up to its launch.
“It comes back to the power question. Disney, when you think about original content creators, are probably the best of all the companies that have recently launched streaming services,” Clinton said in an interview. “They have invested more in content with Marvel, Star Wars, and the Disney catalog and have rapidly acquired the ability to say, ‘You need to do something differently.’ We saw this when Amazon inked a unique deal with Apple to bill iPhone users using the Prime Video app through Amazon’s services.”
A source familiar with the conversations told IndieWire that inking deals to bring new streaming services to Roku have been held up by the company’s inconsistent demands, which change from month-to-month. The individual said it was understandable to expect a “value exchange” as part of negotiations — such as giving Roku content for its own channel — but argues that Roku’s demands on user data and ad inventory stalled negotiations with the new streaming services. Similar issues have stalled negotiations with Amazon, according to the source.
It’s too early to suggest that the lack of Roku and Fire TV access for HBO Max and Peacock will irreversibly cripple their long-term viability, according to analysts. Clinton mused that both streamers will likely make their way to Roku and Fire TV in the next six months, and he and Greenfield agree that as each streamer is still in the process of courting early subscribers, as well as the constantly-evolving nature of the streaming industry meant that NBCUniversal and WarnerMedia would have time to leverage mutually-beneficial deals. The situation will likely become clearer as each streaming service begins to release more original content, according to Greenfield.
“Historically, cable and broadcast networks had compelling content and the leverage has historically been with the companies that have the content,” Greenfield said. “I think you’ll have to wait until the content ramps up for these streaming services to see how significant the lack of access on Roku and Fire TV is. If compelling new content doesn’t solve this than it was probably a mistake to launch these services in the first place.”