Millions of HBO subscribers are getting a welcome surprise Wednesday when the HBO Now app on their smart TVs and phones automatically becomes an app for HBO Max, WarnerMedia's new $15-a-month streaming service. The service will give them access not only to HBO franchises, but shows like "Friends," "South Park" and "Rick and Morty," as well as HBO Max originals, including a "Gossip Girl" remake.

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For quite a few customers, though, the transition won't be as smooth. Because of unresolved contractual agreements, anyone who has subscribed to HBO through Amazon, Roku, Comcast or a few other partners will be missing out on all that new content. And while HBO Now is effectively being phased out this week, the network will have to keep HBO Go up and running as a zombie service to give Comcast customers a way to stream.

All of this is more than just a branding nightmare. It's also a reminder of how hard it is for even a big network like HBO to transition to streaming. Pundits have long focused on the growing competition within the industry, dubbing it the "streaming wars." However, some of the most consequential conflicts in this new age of television aren't between Netflix, HBO and Disney, but between the streaming services and the tech companies that have quickly become the new intermediaries, controlling the platforms and devices that deliver movies and TV shows to our homes.

'A blessing and a curse'

HBO has long struggled to brand its streaming efforts. The network first launched HBO Go as a companion service for existing pay TV subscribers a decade ago, long before Netflix was even on the horizon as a threat. Then, in 2015, it added HBO Now as a dedicated streaming service for cord-cutters, but it kept the brand separate to appease existing cable and satellite TV distribution partners.

When WarnerMedia detailed its plans for HBO Max last fall, the branding of the service was widely met with head-scratching. Yet another service? During a recent briefing with Protocol, Sarah Lyons, WarnerMedia's SVP of product experience, admitted the situation wasn't optimal and blamed HBO's long legacy in the streaming space — and the multitude of contractual agreements that come with it. "It's unfortunately a blessing and a curse," she said.

This week's launch was meant to clarify a lot of that confusion by phasing out HBO Now and slowly transitioning customers away from HBO Go. For that to work, WarnerMedia needed distribution agreements with cable companies as well as online platforms. And while Apple, Google, Samsung, Sony, Verizon and others have signed up to distribute HBO Max to their customers, others haven't.

Roku is said to be close to a deal, but WarnerMedia has been unable to come to an agreement with Amazon. The ecommerce giant has been distributing HBO online through Amazon Channels, a dedicated marketplace for subscription video services that is tightly integrated into streaming adapters and smart TVs running Amazon's Fire TV platform. Prime Video subscribers can easily add HBO with a few button taps of their Fire TV remote.

Amazon fees and ad money fuel dispute

The fissures between WarnerMedia and Amazon are complex and not easily resolved. By some estimates, Channels is responsible for roughly half of all HBO online subscriptions. Amazon takes a cut of 30% to 50% for any subscription service it resells through Channels, according to multiple industry insiders. HBO is said to be on the lower end of that range, but that still leaves Amazon with an estimated nine-figure revenue share per year.

Then there's the user experience. HBO's existing apps have largely been stuck in the past, forcing consumers to navigate through large, alphabetic catalogs to find shows or movies. For the Max service, HBO invested in a more curated approach designed to keep consumers hooked to its own shows. The network also innovated on child-safety and is looking to roll out joint profiles for couples, among other bells and whistles, in the coming months.

Amazon has long disaggregated HBO content, allowing Channels customers to watch HBO content directly through its own apps and devices without ever installing any of HBO's apps. This not only makes it harder for HBO to stand out from the crowd, but it renders the service a lot less sticky and allows Amazon to recommend its own movies and shows against HBO shows.

The biggest point of contention between the two companies, according to industry insiders, is advertising. Much like Roku, Amazon has begun to build out its own connected TV ad business. Ad-supported streaming services that want their app on Fire TV devices must share up to 20% of their ad revenue with Amazon, according to a source with direct knowledge of these arrangements.

HBO does not run ads against its programming, but a number of WarnerMedia's other streaming apps and services do. AT&T also has its own internet-based TV service, AT&T TV Now, which offers a cable-TV-like experience with programming from broadcast and cable networks. Live TV subscription services like these are required to fork over as much as 50% of ad revenue, according to our source, who declined to discuss the subject on the record because of confidentiality agreements.

Cord-cutting and the new kingmakers

Disagreements between TV networks and distributors are nothing new. Networks have frequently squabbled with cable and satellite companies in the past, occasionally even taking their feeds off the air to prevail. But with the ascent of streaming, and the acceleration of cord-cutting, power has been shifting away from these traditional operators and toward the Amazons and Rokus of the world.

No one knows this better than AT&T. When the telco acquired DirecTV in 2015, it ended up with a total of 26 million pay TV subscribers. By the end of the last quarter, that number had declined to 19.4 million. AT&T lost a whopping 4 million subscribers in 2019 alone and is expected to be hit hard this year as well: In Q1, nearly 900,000 of the company's customers cut the cord. With a looming recession, the next three quarters may not look any better.

Some believe content companies like WarnerMedia should simply stand their ground and reject aggregation models like Amazon Channels altogether. "When you are holding some of the world's most iconic content, we suspect HBO is unlikely to waver on HBO Max," wrote Lightshed analyst Richard Greenfield in an investor note this month. "If AT&T/WarnerMedia have any hope of creating a true Netflix-like competitor … they simply cannot cave to channel platforms on HBO Max, no matter the short-term pain incurred."

However, it's anything but certain that WarnerMedia has the upper hand in this conflict. Amazon's Fire TV products surpassed 40 million users at the beginning of the year, and Roku crossed a milestone of 40 million active accounts in Q1 of this year, company figures show. Together, the two companies have an estimated streaming device market share of 70%, according to estimates from Parks Associates.

In other words: Platform operators like Amazon are the new kingmakers — and the battles over carriage on their platforms are the real streaming wars.

NOTE: Following the publication of this story, an Amazon spokesperson sent the following statement about its dispute with WarnerMedia: "With a seamless customer experience, nearly 5 million HBO streamers currently access their subscription through Amazon's Prime Video Channels. Unfortunately, with the launch of HBO Max, AT&T is choosing to deny these loyal HBO customers access to the expanded catalog. We believe that if you're paying for HBO, you're entitled to the new programming through the method you're already using. That's just good customer service and that's a priority for us."