AT&T's Streaming Headaches Continue As Contract Feuds Keep New TV Service Off Amazon, Roku

So we've noted repeatedly how AT&T's entry into the video space hasn't gone according to plan. First, the company spent so much money on mergers ($150 billion for Time Warner and DirecTV) in recent years, it effectively crippled itself with debt. Second, the company passed that merger debt on to most of its customers in the form of price hikes, which defeated the whole point of "cutting the TV cord." Third, AT&T launched so damn many confusing streaming brands simultaneously, it even confused the company's own employees.

Collectively, this resulted in AT&T losing 3.43 million TV subscribers last year alone, which certainly wasn't the kind of sector domination executives originally envisioned.

And there's every indication that things might get worse.

As noted, AT&T already offers a very confusing array of TV services: HBO Go, HBO Now, AT&T Now, AT&T TV, AT&T WatchTV, AT&T U-verse (IPTV) and DirecTV (satellite). Last week the company launched yet another streaming platform, HBO Max. But there's trouble in paradise: because of contractual standoffs with Amazon and Roku, the service apparently won't be appearing on either platform at launch. Given Roku is the most popular streaming hardware in America by a pretty wide margin (39% market share in 2019), that's kind of a problem for AT&T:

"Because of unresolved contractual agreements, anyone who has subscribed to HBO through Amazon, Roku, Comcast or a few other partners will be missing out on all that new content. And while HBO Now is effectively being phased out this week, the network will have to keep HBO Go up and running as a zombie service to give Comcast customers a way to stream.

All of this is more than just a branding nightmare. It's also a reminder of how hard it is for even a big network like HBO to transition to streaming. Pundits have long focused on the growing competition within the industry, dubbing it the "streaming wars." However, some of the most consequential conflicts in this new age of television aren't between Netflix, HBO and Disney, but between the streaming services and the tech companies that have quickly become the new intermediaries, controlling the platforms and devices that deliver movies and TV shows to our homes.

It's interesting to see the tables turned on AT&T, a company routinely used to being in the driver's seat. With Roku now so dominant, AT&T now has to deal with dominant gatekeepers to get its content and services seen on platforms, and so far it's not going particularly great. AT&T had already been in a stand off with Roku that involved the company's creatively-named AT&T TV Now service going dark on all Roku devices. That standoff has now extended to HBO Max, which was supposed to be AT&T's attempt at turning its subscriber losses around.

And while a Roku deal is supposedly getting closer, AT&T remains in a standoff with Amazon over licensing that seems more intractable, given Amazon currently takes a 30-50% cut of HBO subscribers via its "channel" approach to offering other platforms' content:

"Roku is said to be close to a deal, but WarnerMedia has been unable to come to an agreement with Amazon. The ecommerce giant has been distributing HBO online through Amazon Channels, a dedicated marketplace for subscription video services that is tightly integrated into streaming adapters and smart TVs running Amazon's Fire TV platform. Prime Video subscribers can easily add HBO with a few button taps of their Fire TV remote."

So in many ways, the kind of annoying content licensing and retransmission feuds (and annoying blackouts) we saw with traditional cable TV have only simply evolved in the streaming era. But AT&T now finds itself without the kind of power it enjoyed in telecom, where competition is virtually nonexistent and government routinely protected it from the faintest whiff of failure. Even AT&T's attempt to tilt the playing field in its favor to gain leverage in the streaming wars via the net neutrality repeal (ensuring AT&T's unnecessary broadband caps only apply to a competitor's service) isn't likely to help here.

AT&T can probably still right the ship, consolidate its confusing brands, and strike new deals in time. But it's still frequently entertaining to see broadband giants try to compete and innovate after decades of being government pampered monopolies. More often than not, the end result of that steep learning curve (see Verizon's Go90) isn't particularly pretty. Meanwhile, these kinds of standoffs will only lead to frustration and higher piracy rates, which these companies will then blame on everything but themselves a few years from now.