Week In Review: HBO And Roku Strike A Deal, Sony Buys Crunchyroll for $1.175B

1. HBO And Roku Strike A Deal

It was bound to happen, the real question was when, not if,  but on Wednesday, HBO and Roku announced they’d finally reached an agreement that would get the Max app up on Roku. And sure enough, less than 24 hours later, there it was. 

Why It Matters

One of the many reasons that Max has suffered from Failure To Launch is that Warner was unable to strike a deal with Amazon and Roku, which together control somewhere north of two-thirds of the streaming market. Possibly more, given that no one actually seems to be able to accurately account for these things.

That meant that (a) potential new users could not find the app other than on their phones and no one wants to watch Watchmen on their phone, and (b) existing users who had the Now app (which HBO insisted on renaming “HBO” because things weren’t confusing enough”) were not able to switch over to Max, nor were all those people who had the Go app (which disappeared.)

So massive confusion all around.

The sticking point with both Roku and Amazon was that HBO had previously allowed both companies to sell HBO subscriptions via their channel stores, which was quite lucrative as they were able to take a cut of subscription revenue. They were also able to integrate HBO shows into their Roku Channel and IMDBTV lineups, so that viewers did not necessarily need to go to the HBO app, and thus owned whatever viewer data came from that.

As we learned in yesterday’s must-read article by Patience Haggin in the Wall Street Journal, one of the things that Roku demands in their negotiations is the first-born child of every C-level executive. Or some library programming that they can show on The Roku Channel, which, at some networks it seems, feels like the more onerous option.

It's not. Peacock, for instance, only needed to turn over rights to shows like Xena: Warrior Princess, a cult hit from the 90s that was almost rebooted in 2015 and features the rare use of a colon in the title of a TV series.

Mostly though the battles have been over data. While HBO is currently ad-free, Warner will be launching an ad-supported version in 2021 and Roku can make a handsome profit from taking their usual cut of ad revenue and using the data they get to better fuel their thriving ad business.

While integrating HBO shows into the channel store sounds like a good idea, I wonder how many people actually go to The Roku Channel to watch HBO shows, versus just heading straight to the HBO app. 

I mean you need to click on one or the other to move on from the home screen, unlike Amazon, where the HBO shows were front and center when you turned on Fire TV.

So I suspect it was more a way to sell subscriptions--viewers would click on an HBO show and find they needed to subscribe in order to watch it, and fortunately Roku was right there to sell them a subscription for it.

So there’s that.

There’s also the fact that Max is going to be showing Wonder Woman 1984 and a host of other first run movies the day they open in theaters and so both Roku and HBO had a vested interest in making sure that Roku users were able to watch it. 

So there’s that too.

What You Need To Do About It

If you’re Roku, don’t let the naysayers stop you from negotiating hard. Yes, you may have assumed the role of an MVPD, but so what? This is your only source of income, you make a solid product and you ought to be able to profit from it. And while having a wider range of library programming available on The Roku Channel isn’t likely to undercut anyone else’s business, it is going to be a boon to yours.

If you’re HBO, Jason Kilar in particular, well done. You’ve taken Max from Dead Man Walking to one of the Flixes people are most excited about in the course of just a few weeks.

If you’re a consumer and you’re looking for something to watch over break, check out Valley of Tears on Max. Just make sure you watch the version with subtitles--the dubbing is awful.

2. Sony Buys Crunchyroll for $1.175B

While AT&T may be on the rebound with HBO, they still have a massive debt load they need to deal with, which is what seems to have been the driving force behind their sale of anime house Crunchyroll to Sony’s Funimation division.

Why It Matters

While many eyebrows were raised over the fact that Sony paid over a billion dollars for anime, they seem to have gotten a good deal.

The purchase is part of a rollup of anime companies that Sony’s been doing under its “Funimation” umbrella. At this point they pretty much own the space. Netflix is their only real competition and they’ve done all the right things the way Netflix is prone to do--they hired top talent in Japan, gave them free reign and all that.

Only, as frequently happens in these sorts of fan-driven niche communities, Sony’s studios are viewed as more “authentic” because they’re not owned by a big corporate giant.

Which, as you probably figured out, isn’t really true--Sony is pretty big and corporate--but it’s also Japanese and the anime at Sony all lives under a separate umbrella whereas on Netflix, it’s just another subgenre.

The big question is what is Sony going to do with all of this? Will they pull Crunchyroll off of HBO? Try and sell the programming to the highest bidder(s)? Double down on the existing Crunchyroll app? 

We’ll know soon enough.

What Crunchyroll does have going for it however is that it has a very dedicated and loyal fan base, the sorts of viewers who are likely to support advertisers who support anime. Around 3 million people currently subscribe to Crunchyroll, which also has around 70 million viewers with free ad-supported accounts.

What You Need To Do About It

If you’re Sony, you need to figure out what to do with the ultimate example of “a small dedicated fan base is more valuable than a larger indifferent one.” You’ll have to crunch the numbers to see what makes more sense--aligning with a new Flix, going it on your own, or both, but it seems like you’re in a good place.

If you’re AT&T, this was a smart move, anime is not in your DNA, and besides, you need the money.

If you’re an anime fan, you’ve come a long way from the days when you needed to pirate files off of KissAnime. Hopefully Sony will provide you with a superior product.