When AT&T made the decision to yank HBO and HBO Max from Amazon Prime Video in September, it affected 5 million customers. In the months since then, HBO has done all it can to reacquire those subscribers within their own ecosystem. Based on today's earnings report, HBO Max is now hovering near its pre-departure numbers: 46.8 million U.S. subscribers, compared to 47 million just before leaving Amazon.
But why would HBO leave Amazon in the first place? AT&T CEO John Stankey said today that it was the right decision.
“Better to have (customers) where you have direct access control of them, can market to them, know what they’re doing than to have it be in some black box where you absolutely have no idea what somebody else is doing with aggregating your content and your exposure to the customer,” Stankey said.
“At the end of the day, you want full control of your customers,” Stankey said. “And I’m confident with the strength of the offer that will be in the market, those customers are all going to come back into the offer. It may take a couple of quarters for that to happen. But there will eventually be a product out there that they’re going to look at and say they want to be part of.”
Prime Video is a key part of the strategy for any small streaming service that wants to scale up. By offering an add-on channel, a new streaming service can get access to a massive subscriber base that might be willing to tack on another subscription for a few dollars a month. Streaming services like Shudder, Britbox, and Paramount+ have taken this approach.
While the exposure to new subscribers is the upside, the downside is that - as Stankey noted - streaming services need to share (or give up) data to Amazon. Amazon also takes a cut of the revenue.
To AT&T, it was worth the gamble that those 5 million subscribers would eventually come home, even if they were annoyed at losing the HBO programming in the Amazon Prime Video ecosystem.
We’ve seen this happen before and we’re likely to see it again. Prime Video serves as a springboard for streamers that want to accelerate into a standalone ecosystem. It’s likely that small, niche streamers will never get enough subscribers to justify that leap, but we would expect Paramount+ is the next (and possibly final) service to reach escape velocity.
Amazon Prime Video is a subscription video streaming service that includes on-demand access to 10,000+ movies, TV shows, and Prime Originals like “The Lord of the Rings: The Rings of Power,” “Jack Ryan,” “The Marvelous Mrs. Maisel,” “The Boys,” and more. Subscribers can also add third-party services like Showtime, and Starz with Amazon Prime Video Channels.