Why Roku Really Needs HBO Max... And Why It Really Does Not

Summary

• Following the epic announcement from Warner Bros that its entire 2021 roster will be coming to HBO Max and theaters simultaneously, the industry is still feeling the impact.
• Yet that seismic shift has not shaken loose the one barrier AT&T’s HBO Max has been unable to overcome in Roku, where it is still glaringly absent.
• Many believed HBO Max’s future influx of WB films paired with its Amazon Fire Stick deal would have been enough to force a deal with Roku.
• The sticking points, which are largely tied to its standard cuts from profit-sharing and advertising, are hard for Roku to stray from because then other partners will want the same newer terms.
• While it may seem like HBO Max gained a lot of power back with its recent moves, Roku hasn’t lost a beat with its stock price and that should satisfy shareholders for now.

(Credit: Roku)

Just days after AT&T (T) and Warner Bros. took a sledgehammer to the traditional film model, the industry as a whole is still feeling the aftershocks.

In the time since we've heard from many of the big players.

Warner Bros. promised this is a one-year stopgap (which nobody believes), Cinemark (CNK) and Regal took a steady as they go approach and AMC (AMC) went about as nuclear as one would expect from a company that just got kicked while it was down…again.

Yet the one company being remarkably quiet is Roku (NASDAQ:ROKU).

The streaming hardware leader has been in a very public holdout with HBO Max and AT&T since the service launched and is one of the big reasons why many believe the fledging service is having such a rough go.

Surely now with HBO Max and WB's seismic screen-to-stream shakeup that will force an agreement between two sides.

Right?

Well, truthfully despite a rumored report the other week the sides were close, other reports have suggested they are still far apart. And this news while seemingly the perfect catalyst may not move the needle at all.

It also begs the question - does Roku really need HBO Max as much as HBO Max really needs Roku?

(Credit: WB)

First as always, some background.

The streaming wars have always been a point of interest for investors - largely because many got in early and now are seeing sizable benefits. Or many missed the boat and are trying to catch up. Regardless, whenever one streamer gets a shiny new toy, it causes a ripple effect - in this case HBO Max just got 18 new toys, one shinier than the next.

This week it was revealed that between Christmas and all of 2021, the entire Warner Bros. slate will make its

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.