Deeper Dive—HBO Max box office blowout puts pressure on Roku

Roku
(Roku)

Warner Bros. traveled a heretofore unthinkable path this week when it said it would send all its 2021 films directly to HBO Max. The move could up the pressure on Roku.

Throughout the pandemic, many studios have been dabbling in the art of breaking theatrical windows, which typically give theaters exclusive distribution during the first three months of a film’s release. Disney has used Disney+ as a platform for films like the upcoming “Soul” and “Mulan,” which came with a premium price add-on. Universal took one of the first major steps back in March when it sent “Trolls World Tour” to digital platforms on the same day it hit theaters.

Save for a few exceptions, major subscription streaming services like Amazon Prime Video, Hulu and Netflix have been releasing major Hollywood films directly to streaming for years.

Sponsored by Dell Technologies

Whitepaper: How to Elevate Your Content Delivery Workflows With Dell EMC PowerScale

Learn how Dell EMC PowerScale helps meet surging viewer demand while reducing costs with a single centralized platform for the ingest, processing, and delivery of the content your viewers love.

But what Warner Bros. is doing feels much more seismic in its ability to shift the movie release model in the U.S. The AT&T-owned studio will continue to exhibit its films theatrically worldwide while adding an exclusive one-month access period on HBO Max in the U.S. The hybrid model is an extension of the studio’s previously announced plans to release “Wonder Woman 1984” on Christmas Day in theaters and on HBO Max.

Giving consumers the choice between watching new movies at home or in theaters is an important step to take during a pandemic. It will definitely disrupt (but hopefully not destroy) the traditional theatrical exhibition industry. At the very least, it’s a fascinating experiment that lots of people want to be a part of, and Roku users are already feeling left out.

Almost immediately after the announcement went out, the tweets started pouring in.

The outcry from consumers may be part of the plan. Variety’s Todd Spangler reported that one reason why Warner Bros. is putting its movies on HBO Max is to pressure Roku toward a deal. It makes sense. The HBO Max 2021 movie blitz has the potential to spark significant subscriber growth for the service; and to maximize that potential, HBO Max really needs distribution on one of the most popular streaming platforms.

Some in the industry like TV[R]EV analyst Alan Wolk were not too surprised by the news.

Indeed, AT&T and WarnerMedia executives have for months been telegraphing the current situation that HBO Max and Roku find themselves in.

HBO Max launched on May 27 without apps on Amazon or Roku devices but AT&T CEO John Stankey told Bloomberg in September that he was optimistic that HBO Max will land on one of those platforms “in relatively short order.” In November, HBO Max reached a deal with Amazon.

But before the Amazon domino fell, Stankey suggested that a HBO Max deal with either Amazon or Roku may force the hand of the holdout, since it would be hard to “be the Lone Ranger standing out there on its own.”

In August, WarnerMedia CEO Jason Kilar told Bloomberg that the fourth quarter could increase the pressure on device makers to make HBO Max deals so they have the same content lineup as their competitors.

“As we head into the fourth quarter, when gift giving happens, it becomes a more material situation for a seller of hardware,” Kilar told the publication.

Now that both predictions have come true, the impetus for a deal between HBO Max and Roku is stronger than ever. So, it’s not unreasonable to think that the two parties will finally come to terms before the end of the year.