Amazon pulls off coup against Netflix with HBO deal

Summary:Point to Amazon today, but the tech giant's Prime content library still looks thin compared to Netflix and Hulu.

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It's no secret that Amazon Prime has struggled as far as its digital TV and movie library is concerned.

But the entertainment arm of the tech giant just got a major booster shot thanks to an exclusive deal with what might have been the elusive golden egg in Hollywood for online video: HBO.

However, there are a few things to note before getting over excited and canceling/signing up for new subscriptions left and right.

Under a multi-year licensing agreement, Amazon Prime will be the exclusive host of HBO digital content outside of HBO Go, which is still tethered to traditional cable subscriptions -- much to the chagrin of consumers who prefer to watch programming from their computers, tablets, and smartphones.

The first wave of HBO content will become available on May 21 on Prime, with an app for Fire TV scheduled to roll out by the end of the year.

Neither HBO nor Amazon revealed how long this deal is valid let alone how much it cost either party.

That first wave will include a boatload of highly-acclaimed shows, namely The Sopranos, Six Feet Under, and The Wire as well as mini-series like Band of Brothers and John Adams. There will also be a few shows still on the air with early seasons promised to become available for streaming next month, such as True Blood and Boardwalk Empire.

But fans of currently airing popular shows such as Girls, The Newsroom and Veep will need to wait as these series will not be added to Prime until approximately three years after airing on HBO.

No word on Game of Thrones, one of the most highly-watched programs in HBO history not to mention the most pirated show on the Internet. This could have been a gateway to get around that, but HBO doesn't seem bothered enough just yet.

Many subscribers, would-be subscribers, and even analysts are likely already put off by Netflix this week following the announcement that streaming rates would be bumped up a few bucks.

At first glance, this might have many of those would-be subscribers (and even current users) re-thinking where they want to wire their money each month.

But this is not nearly the end of the world for the digital media giant, which has weathered many more serious storms and blunders over the last few years. (No one will ever forget Qwikster, as much as we all want to try.)

For one, Netflix is only going up by $1 to $2 per month. Amazon Prime membership (which does include tons of other goodies such as free two-day shipping) just shot up to $99 per year. They're not exactly on the same playing field, as much as we all want to compare them.

Los Angeles-based financial services and investment firm Wedbush suggested this could nudge Amazon to break Prime out as a standalone service, which would really kick this game into high-gear:

We think Amazon has an incentive to offer streaming for half the current Netflix price ($3.99 monthly), and could use a standalone streaming offering to justify the recent price increase for Prime simply by saying that the $99 price includes a $47.88 streaming subscription. Amazon could also cross-sell Prime to streaming customers, offering an upgrade to Prime and free shipping for a year for an additional $51.12. If this happens, we think that Netflix shares will be under continuing pressure for the foreseeable future.

Looking beyond original content, Netflix arguably still has a much more substantial library (at least as far as TV is concerned), and the lack or delay of HBO's current hits might still deter consumers from shifting alliances.

Topics: E-Commerce, Apps, Mobility, Tablets, Tech Industry

About

Rachel King is a staff writer for CBS Interactive based in San Francisco, covering business and enterprise technology for ZDNet, CNET and SmartPlanet. She has previously worked for The Business Insider, FastCompany.com, CNN's San Francisco bureau and the U.S. Department of State. Rachel has also written for MainStreet.com, Irish Americ... Full Bio

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