T AT&T Inc

By Drew FitzGerald and Joe Flint 

AT&T Inc. reached a deal to offer its HBO Max streaming service through Amazon.com Inc., removing a distribution barrier that has checked the app's growth since its launch.

The telecom company said existing HBO apps on Amazon Fire dongles and tablets will automatically upgrade to HBO Max starting Tuesday. Viewers who subscribe to HBO through Amazon Prime Video Channels, the e-commerce company's TV portal, will also get upgrades. Terms weren't disclosed.

AT&T has staked much of its future on HBO Max, a beefed-up version of the premium TV channel designed to compete with online services like Netflix, Disney+ and Amazon's own original TV series. Executives planned for the newer streaming service to eventually supplant classic HBO.

That transition has moved slowly since HBO Max's May 27 launch. Overall U.S. HBO subscribers hit a record 38 million at the end of September, but about 8.6 million subscribers had activated HBO Max. Many others were still watching the channel through an older cable subscription or hadn't bothered to log into the new service, which at $15 a month costs the same as legacy HBO.

The lack of compatibility with Amazon and Roku Inc. devices was one of the factors holding back HBO Max's growth. Executives in AT&T's WarnerMedia division are eager to draw more customers to the new streaming video app, which gives the company more control over customer billing relationships.

The standoff became a topic of conversation on Capitol Hill in July, when Amazon chief Jeff Bezos testified about it during an appearance before the House Subcommittee on Antitrust, Commercial and Administrative Law.

Amazon and Roku together control more than 70% of the streaming-media player market, according to industry researcher Parks Associates. The Amazon agreement leaves Roku as an outlier with no agreement to carry HBO Max.

The two sides are separated by a dispute over how much programming WarnerMedia is willing to provide to Roku for its own channel as well as hammering out terms on sharing advertising when HBO Max launches an ad-supported version of the service next year, according to people familiar with the matter.

The Amazon deal will provide a morale boost for HBO Max. At a town hall meeting last week, WarnerMedia Chief Executive Jason Kilar was grilled about the lack of a deal with Amazon and Roku. "It feels like we are spinning our wheels," one questioner said regarding HBO Max, according to a person familiar with the meeting.

Mr. Kilar said HBO Max was nearing deals with both, adding, "it's better for Roku and Amazon" to have the service available for its subscribers. "With any negotiation we have to make sure we understand what is critical to their companies to find common ground," Mr. Kilar told staffers, this person said.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

November 16, 2020 11:06 ET (16:06 GMT)

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