ANALYST Q&A: The HBO/Amazon Deal and Amazon’s Traction in the Connected Home Market

by John Barrett | Jun. 26, 2014

We interviewed consumer analytics director John Barrett about HBO and Amazon’s recent landmark deal. Last month, Amazon Prime subscribers were able to access some of the premium cable channel’s older content online. It’s a huge shift in the streaming video industry.

Parks Associates: What do you think about Amazon buying streaming rights to older HBO content? Do you think it’s a smart move?

John Barret: Well, certainly you're seeing a lot of competition now between the different players that offer streaming video services, and the selection of content is a major way that they compete. There's a little something to the user interface and all that, but at the end of the day, what matters most is what you have available to watch. So we're seeing these players now, specifically Netflix and Amazon, vying against each other to get the content that they think is going to attract the viewers. It’s certainly significant to the extent that the user base wants to watch the content that’s licensed, and that will help them out.

PA: Is that what Parks Associates research is showing too?

JB: Well, our research shows that Netflix is the dominant player. Amazon is certainly doing well and growing, and so Amazon is having to, once again, go after some content deals like this to try to continue their push to compete against Netflix. Netflix obviously had a big early mover advantage in that they were in a lot of the early devices—and they were around for a while—and obviously they had their disc subscription base to leverage for entrance into the online video space.

PA: Any thoughts on why HBO did not include Game of Thrones?

JB: Well, HBO is in a peculiar position because they are friends and they're also competitors. You know, HBO is certainly an alternative to having Amazon and certainly an alternative to having Netflix, and so there is this question: if somebody is going to pay a little bit extra to top up their pay-TV service, what's the best use of that money? Is it to get HBO? Is it to get Amazon? Is it to get Netflix? And so HBO certainly is conscious of the fact that they want to have their best content at home on HBO to make sure that they're getting the subscriber first and foremost. And I think there's probably some kind of strategic decisions made—at what point is the content old enough that they're not really going to use it that much on HBO, that it's not going to be a key driver for an HBO subscription? They would just want to monetize the content at that point.

Of course you see this in other ways. HBO develops programming, and they leverage it for all that it's worth to get their subscriber numbers to go up. And then there's other ways to monetize it—for instance, by burning it on disc so that you can see it even if you're not an HBO subscriber. It's kind of a balance as far as how to use the content.

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John Barrett currently analyzes digital media and international trends for Parks Associates and also heads the company’s consumer research team. He regularly advises companies from both the content and hardware industries on their digital media strategies and has authored dozens of industry reports.

He holds an MA in international economics from the Johns Hopkins University: School of Advanced International Studies (SAIS) and a BS in international affairs from Georgetown University.

Follow John on Twitter at @ParksData.

INDUSTRY EXPERTISE: International Research, Digital Media, Mobile TV, Social Media, User-generated Content, Web 2.0

Further reading:


Media requests to talk with John or to review specific research data can be directed to Holly Sprague at hsprague@gmail.com. To purchase research, contact sales@parksassociates.com.



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