This story has been updated from 1:35 pm EDT to include comments made by Bernstein Research analyst Carlos Kirjner.
NEW YORK (TheStreet) -- Amazon (AMZN) just one-upped Netflix (NFLX) by announcing a big online content licensing deal with Time Warner's (TWX) HBO.
Amazon announced on Wednesday morning that it inked an exclusive multi-year online-only subscription deal for select HBO programming to bring some of its most popular shows to Amazon Prime Members.
This is the first time that HBO programming has been licensed to an online-only subscription streaming service, according to the press release. It means that consumers no longer have to pay for HBO through their cable provider to see a big portion of the premium cable channel's popular shows.
If this doesn't entice consumers to subscribe to Amazon Prime and hence acquire Amazon Fire TV, its new streaming set-top box, I don't know what will.
Before you get your panties in a bunch, let it be known Game of Thrones is not a part of the content deal. However, with a partnership like this, it's clear that HBO is betting on Amazon to be the streaming service of choice for customers. In the release, Amazon says that for the first time ever, all seasons of past favorite shows like
Six Feet Under,
Eastbound & Down,
Band of Brothers and
Deadwood, as well as the early seasons of current shows
Boardwalk Empire and
True Blood, will become available on Amazon Prime Instant Video starting on May 21.
Of course HBO is not giving away the entire farm to Amazon just yet. Besides Game of Thrones being noticeably absent from the release, earlier seasons of newer HBO shows, such as Girls, The Newsroom and Veep "will become available over the course of the multi-year agreement, approximately three years after airing on HBO." Additional seasons of other current series will also be added over time.
In addition, HBO GO, the channel's streaming app that's free when customers subscribe to HBO, will become available on Fire TV, with the companies targeting a launch by year-end. HBO GO is gives subscribers instant access to over 1,700 titles online including every episode of new and classic HBO series, as well as HBO original films, miniseries, sports, documentaries, specials and a wide selection of blockbuster movies, the release said.
The news is a blow to Netflix, especially as the streaming service announced on Monday that it will be boosting prices to the tune of $1 to $2, which will vary by country, for new streaming customers and eventually for all customers. Currently subscribers pay $7.99 a month for two streaming devices (about $96 a year), or $11.99 a month for four.
"We believe the HBO deal positions Prime Instant Video as a viable competitor and potentially more appealing alternative to Netflix," Wedbush Securities Michael Pachter wrote in a note to clients. Pachter rates Amazon at "neutral." While Amazon and HBO did not disclose the financial terms of the deal, Pachter estimates that Amazon is paying HBO "likely well above $200 million" annually. "Through the HBO deal, in addition to its own original content, Amazon has the potential to offer close to seventy different series that we believe HBO owns outright, with multiple seasons available for the more successful shows. In comparison, we believe that Netflix's original series figure is closer to ten, with up to only two seasons available. Also, Netflix typically buys first window streaming rights only, as opposed to owning the content," the note said.