Roku (NASDAQ:ROKU) was the last holdout of the major streaming platforms for AT&T's (NYSE:T) HBO Max. AT&T had to commission Wonder Woman, Lebron James, Neo, and Godzilla in order to finally strike a deal to get its flagship streaming service on Roku devices. 

The media company will release its entire slate of 2021 films simultaneously in theaters and on HBO Max. The two companies came to an agreement just in time for Roku's 46 million users to stream Wonder Woman 1984 on Christmas Day.

Holding out seems to have benefited Roku, even if indirectly, by forcing AT&T to add lots of high-quality content with broad appeal to HBO Max.

The HBO Max and Roku logos.

Image source: Roku.

What Roku got (and didn't get) in the deal

Roku might not have gotten everything on its wishlist in its negotiations with AT&T. While neither party disclosed the exact details of the deal, Roku will be losing the right to sell HBO through The Roku Channel. New subscribers will have to install and sign up directly through the HBO Max app, giving AT&T full control over its own viewer data.

Roku did, however, receive concessions from AT&T on its ad inventory for the forthcoming ad-supported version of HBO Max. That may be more valuable to Roku as it's seen ad-supported streaming outpace subscription-only streaming in 2020, and that trend ought to continue in the future.

Details like whether AT&T committed to buying advertisements to promote HBO Max on the Roku platform or whether AT&T's other apps on Roku were impacted in negotiations are unknown. Roku will likely benefit, nonetheless, from at least some additional ad spend from AT&T. It may also get a cut of revenue from signups.

HBO Max on a TV.

Image source: WarnerMedia.

The real win for Roku

Roku may not have gotten AT&T to move much on its position over distribution and revenue sharing over the last seven months, but one big change made the holdout worthwhile. The release of WarnerMedia's entire 2021 film slate day and date on HBO Max and in theaters makes HBO Max a much more appealing streaming service. What's more, it gives streaming additional value compared to alternative forms of entertainment like going to the theater or watching traditional pay-TV.

Make no mistake, AT&T is giving up a lot with this maneuver. Offering its films on HBO Max will result in about $1.2 billion in foregone revenue, according to analyst Craig Moffett of MoffettNathanson. While it will offset some of that revenue with new HBO Max subscribers, it's likely taking a big loss to get the streaming service off the ground.

And that's to the benefit of Roku. The streaming platform should see a continued increase in engagement as people opt to stay home and stream instead of going out to the theater. The more streaming Roku users are doing, the more opportunities Roku has to monetize their viewership.

Roku has seen its average revenue per user increase to $27 over the trailing 12 months. That's up 20% year over year, despite the company experiencing depressed ad pricing during the coronavirus pandemic. That number should accelerate in 2021 as heightened streaming adoption, helped by HBO Max, combines with a pickup in ad sales as the economy reopens.

Even subscription-only services like HBO Max help grow Roku's platform revenue by supporting the overall adoption of streaming versus other forms of entertainment. More streaming options and hours means more time spent on the Roku home screen, where Roku owns some valuable advertising real estate. It means more time watching Roku's advertisements in ad-supported streaming services. It's also an opportunity to collect a share of revenue from sign ups and more payment information from existing users, which can help its ad targeting. 

It's unknown whether Roku made significant headway directly with AT&T in its HBO Max negotiations, but it definitely emerged a winner.