Amazon and HBO just announced a licensing agreement that will let Amazon Prime members watch old HBO shows like “The Wire” and “The Sopranos” starting on May 21.
Amazon will shell out more than $US300 million over the course of the three-year term, according to Re/Code’s Peter Kafka.
The deal comes as part of Amazon’s big push to beef up its Instant Video selection to entice more people to become Prime members for $US99 a year. The company — which is also releasing a handful of original shows in the coming months — is spending at least $US1 billion building up its content catalogue, according to Re/Code.
Even though $US100 million a year isn’t a staggering amount for HBO, selling old shows produces high-margins for the company. (HBO did $US4.9 billion in revenue last year, and had $US1.7 billion in operating income.)
Although there was an initial shock factor after the announcement, HBO isn’t actually doing anything too radical by selling its classic shows to Amazon. It’s done syndication in the past. The Sopranos was sold to A&E, for instance. Because it’s only handing over seasons three years after they have aired (and never handing over “Game Of Thrones”), there’s little risk that it will lose paying customers because they decided to switch to Amazon.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.