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 This is the first time HBO, owned by Time Warner Inc, has licensed
its award-winning programming to an online subscription streaming
service, the companies said in a statement on Wednesday.
HBO shows are not available through Netflix. Netflix shares fell 4.7
percent to $355.31 on Nasdaq.
The deal does not include the entire library of HBO shows that are
available on HBO Go streaming service. HBO Go will become an option
on Amazon's Fire TV device, but only for subscribers to the HBO
cable channel.
The partnership with HBO helps Amazon build a stronger case for its
Amazon Prime service roughly a month after the largest U.S. online
retailer boosted its annual Prime fee to $99 from $79.
Prime subscribers will have access to the HBO programming on May 21.
Most will be older shows such as "The Sopranos" and "The Wire," or
earlier seasons from current series such as "True Blood."
"HBO has the catalog depth to serve as a game-changer for Amazon,"
Wedbush Securities analyst Michael Pachter said.
Amazon likely agreed to pay $200 million to $400 million a year for
the rights to HBO programming, Cantor Fitzgerald analyst Youssef
Squali estimated.
HBO's top program, "Game of Thrones," is not part of the deal. Older
hit series "Sex and the City," "Entourage" and "Curb Your
Enthusiasm" are also excluded because they are tied up in
syndication deals on cable.
Episodes of current shows such as "Girls," "The Newsroom" and "Veep"
will become available three years after they run on HBO, the network
said.
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HBO negotiated the streaming deal with Amazon and did not seek bids
from other companies, according to two sources familiar with the
deal.
Amazon has been building its content libraries to tap the growing
appetite for online video. Like Netflix, it offers original shows
including political comedy "Alpha House" starring John Goodman.
A Netflix spokesman said both Amazon and another one of its
competitors, video website Hulu "are acquiring lots of new content
that represents the maturation of Internet television, which is
great for the consumer." Hulu is owned by media companies Walt
Disney Co, 21st Century Fox and Comcast Corp.
The streaming deal shows a new willingness by HBO to be flexible in
licensing as well as a shift away from agreements with traditional
cable networks. HBO's past licensing deals have been with cable
networks.
HBO and Time Warner's top executives have maintained that the HBO Go
product could one day be sold separately but that currently the
economics do not make sense.
Time Warner shares gained 1.5 percent to $65.90, while Amazon fell
1.7 percent to $323.80.
(Reporting by Liana B. Baker, Lisa Richwine and Deepa Seetharaman;
editing by Lisa Von Ahn and Alden Bentley)
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