Last week, nearly seven months after its launch, HBO Max finally landed on the Roku platform. Roku reached an agreement with AT&T and division WarnerMedia to finally close the biggest hole in the streaming service’s distribution, just in time for the debut next week of the blockbuster movie “Wonder Woman 1984.”
What took so long, and how did the sides finally come to an agreement? The Wall Street Journal reported this week on the protracted negotiations.
Roku, per the Journal report, “had tough financial terms WarnerMedia wouldn’t meet.” The battle ultimately hinged on “the question of how to divvy up the spoils of video streaming.” Both sides, though, were incentivized to reach a deal prior to the arrival of “Wonder Woman,” which will be followed in 2021 with the arrival of the entire planned Warner Brothers movie slate on HBO Max.
In addition, another point of contention in the negotiations was The Roku Channel, Roku’s in-house channel which has expanded throughout the year. Roku has leaned on media companies to provide programming for the channel, but WarnerMedia had resisted, while Roku, in turn, had asked for part of the ad space in a future ad-supported version of HBO Max. The exact shape of the final agreement is unclear, although a source told the newspaper that it did not entail Warner agreeing to supply content to the Roku Channel.
A similar Roku Channel disagreement was at the heart of Roku’s dispute earlier this year with NBC Universal, over the Peacock app. Those two sides reached agreement in September. Meanwhile, WarnerMedia agreed to a deal in November with its other remaining holdout, Amazon, to make HBO Max available on that streaming platform. HBO Max also arrived on Comcast set-top boxes shortly before the announcement of the Roku deal.
The WSJ report, citing Parks Associates, said that Roku now has forty-six million active accounts, and 38 percent of the hardware market in the United States. The Journal also said that Roku makes most of its profit these days not from the sale of physical devices, but rather from selling ads in streaming apps.
The deal that was reached between the parties led Roku’s stock to soar on Thursday. The stock reached as high as $349 a share on the news of the HBO deal, continuing a massive run ever since October. Roku was trading at $138.19 a share on January 1. One analyst, following the news, raised its price target for Roku to a Street-high $410.
Meanwhiile, Roku is in yet another standoff, with the cable company Charter Communications, and the dispute led the company to pull the Spectrum TV app from its channel store for new downloads, although the app still works for existing customers.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.