diff --git a/packager/app/test/packager_test.py b/packager/app/test/packager_test.py
index 1c8b9bc010..25fee9265b 100755
--- a/packager/app/test/packager_test.py
+++ b/packager/app/test/packager_test.py
@@ -63,6 +63,7 @@ class PackagerAppTest(unittest.TestCase):
                   language_override=None,
                   output_format=None,
                   live=False,
+                  hls=False,
                   test_files=None):
     if test_files is None:
       test_files = ['bear-640x360.mp4']
@@ -85,10 +86,8 @@ class PackagerAppTest(unittest.TestCase):
 
         if live:
           if output_format == 'ts':
-            stream = ('input=%s,stream=%s,segment_template=%s-$Number$.ts,'
-                      'playlist_name=%s.m3u8' % (test_file, stream_descriptor,
-                                                 output_prefix,
-                                                 stream_descriptor))
+            stream = ('input=%s,stream=%s,segment_template=%s-$Number$.ts' %
+                      (test_file, stream_descriptor, output_prefix))
           else:
             stream = (
                 'input=%s,stream=%s,init_segment=%s-init.mp4,'
@@ -106,6 +105,8 @@ class PackagerAppTest(unittest.TestCase):
           stream += ',format=%s' % output_format
         if language_override:
           stream += ',lang=%s' % language_override
+        if hls:
+          stream += ',playlist_name=%s.m3u8' % stream_descriptor
         streams.append(stream)
     return streams
 
@@ -417,10 +418,12 @@ class PackagerFunctionalTest(PackagerAppTest):
   def testPackageAvcTs(self):
     # Currently we only support live packaging for ts.
     self.assertPackageSuccess(
-        self._GetStreams(['audio', 'video'],
-                         output_format='ts',
-                         live=True,
-                         test_files=['bear-640x360.ts']),
+        self._GetStreams(
+            ['audio', 'video'],
+            output_format='ts',
+            live=True,
+            hls=True,
+            test_files=['bear-640x360.ts']),
         self._GetFlags(output_hls=True))
     self._DiffLiveGold(self.output[0],
                        'bear-640x360-a-golden',
@@ -441,6 +444,7 @@ class PackagerFunctionalTest(PackagerAppTest):
             ['audio', 'video'],
             output_format='ts',
             live=True,
+            hls=True,
             test_files=['bear-640x360.ts']),
         self._GetFlags(
             output_hls=True,
@@ -467,6 +471,7 @@ class PackagerFunctionalTest(PackagerAppTest):
             ['audio', 'video'],
             output_format='ts',
             live=True,
+            hls=True,
             test_files=['bear-640x360.ts']),
         self._GetFlags(
             encryption=True,
@@ -495,6 +500,7 @@ class PackagerFunctionalTest(PackagerAppTest):
             ['audio', 'video'],
             output_format='ts',
             live=True,
+            hls=True,
             test_files=['bear-640x360.ts']),
         self._GetFlags(
             output_hls=True,
@@ -680,10 +686,12 @@ class PackagerFunctionalTest(PackagerAppTest):
   def testPackageAvcTsWithEncryption(self):
     # Currently we only support live packaging for ts.
     self.assertPackageSuccess(
-        self._GetStreams(['audio', 'video'],
-                         output_format='ts',
-                         live=True,
-                         test_files=['bear-640x360.ts']),
+        self._GetStreams(
+            ['audio', 'video'],
+            output_format='ts',
+            live=True,
+            hls=True,
+            test_files=['bear-640x360.ts']),
         self._GetFlags(encryption=True, output_hls=True))
     self._DiffLiveGold(self.output[0],
                        'bear-640x360-a-enc-golden',
@@ -708,6 +716,7 @@ class PackagerFunctionalTest(PackagerAppTest):
             ['video'],
             output_format='ts',
             live=True,
+            hls=True,
             test_files=['sintel-1024x436.mp4']),
         self._GetFlags(
             encryption=True,
@@ -844,6 +853,49 @@ class PackagerFunctionalTest(PackagerAppTest):
     self._DiffMediaInfoGold(self.output[0], 'bear-640x360-a-cenc-golden.mp4')
     self._DiffMediaInfoGold(self.output[1], 'bear-640x360-v-cenc-golden.mp4')
 
+  def testPackageWithHlsSingleSegmentMp4Encrypted(self):
+    self.assertPackageSuccess(
+        self._GetStreams(['audio', 'video'], hls=True),
+        self._GetFlags(encryption=True, output_hls=True))
+    self._DiffGold(self.output[0], 'bear-640x360-a-cenc-golden.mp4')
+    self._DiffGold(self.output[1], 'bear-640x360-v-cenc-golden.mp4')
+    self._DiffGold(self.hls_master_playlist_output,
+                   'bear-640x360-av-mp4-master-cenc-golden.m3u8')
+    self._DiffGold(
+        os.path.join(self.tmp_dir, 'audio.m3u8'),
+        'bear-640x360-a-mp4-cenc-golden.m3u8')
+    self._DiffGold(
+        os.path.join(self.tmp_dir, 'video.m3u8'),
+        'bear-640x360-v-mp4-cenc-golden.m3u8')
+
+  # Test HLS with multi-segment mp4 and content in subdirectories.
+  def testPackageWithHlsMultiSegmentMp4WithCustomPath(self):
+    test_file = os.path.join(self.test_data_dir, 'bear-640x360.mp4')
+    # {tmp}/audio/audio-init.mp4, {tmp}/audio/audio-1.m4s etc.
+    audio_output_prefix = os.path.join(self.tmp_dir, 'audio', 'audio')
+    # {tmp}/video/video-init.mp4, {tmp}/video/video-1.m4s etc.
+    video_output_prefix = os.path.join(self.tmp_dir, 'video', 'video')
+    self.assertPackageSuccess(
+        [
+            'input=%s,stream=audio,init_segment=%s-init.mp4,'
+            'segment_template=%s-$Number$.m4s,playlist_name=audio/audio.m3u8' %
+            (test_file, audio_output_prefix, audio_output_prefix),
+            'input=%s,stream=video,init_segment=%s-init.mp4,'
+            'segment_template=%s-$Number$.m4s,playlist_name=video/video.m3u8' %
+            (test_file, video_output_prefix, video_output_prefix),
+        ],
+        self._GetFlags(output_hls=True))
+    self._DiffLiveGold(audio_output_prefix, 'bear-640x360-a-live-golden')
+    self._DiffLiveGold(video_output_prefix, 'bear-640x360-v-live-golden')
+    self._DiffGold(self.hls_master_playlist_output,
+                   'bear-640x360-av-mp4-master-golden.m3u8')
+    self._DiffGold(
+        os.path.join(self.tmp_dir, 'audio', 'audio.m3u8'),
+        'bear-640x360-a-mp4-golden.m3u8')
+    self._DiffGold(
+        os.path.join(self.tmp_dir, 'video', 'video.m3u8'),
+        'bear-640x360-v-mp4-golden.m3u8')
+
   def testPackageWithLiveProfile(self):
     self.assertPackageSuccess(
         self._GetStreams(['audio', 'video'], live=True), self._GetFlags())
diff --git a/packager/app/test/testdata/bear-640x360-a-mp4-cenc-golden.m3u8 b/packager/app/test/testdata/bear-640x360-a-mp4-cenc-golden.m3u8
new file mode 100644
index 0000000000..2d839ae79d
--- /dev/null
+++ b/packager/app/test/testdata/bear-640x360-a-mp4-cenc-golden.m3u8
@@ -0,0 +1,17 @@
+#EXTM3U
+#EXT-X-VERSION:6
+## Generated with https://github.com/google/shaka-packager version <tag>-<hash>-<test>
+#EXT-X-TARGETDURATION:2
+#EXT-X-PLAYLIST-TYPE:VOD
+#EXT-X-MAP:URI="output_audio.mp4",BYTERANGE="967@0"
+#EXT-X-KEY:METHOD=SAMPLE-AES-CENC,URI="data:text/plain;base64,MTIzNDU2Nzg5MDEyMzQ1Ng==",KEYFORMAT="identity"
+#EXTINF:1.022,
+#EXT-X-BYTERANGE:16655@1035
+output_audio.mp4
+#EXTINF:0.998,
+#EXT-X-BYTERANGE:16650
+output_audio.mp4
+#EXTINF:0.743,
+#EXT-X-BYTERANGE:10272
+output_audio.mp4
+#EXT-X-ENDLIST
diff --git a/packager/app/test/testdata/bear-640x360-a-mp4-golden.m3u8 b/packager/app/test/testdata/bear-640x360-a-mp4-golden.m3u8
new file mode 100644
index 0000000000..c9719d6f6f
--- /dev/null
+++ b/packager/app/test/testdata/bear-640x360-a-mp4-golden.m3u8
@@ -0,0 +1,13 @@
+#EXTM3U
+#EXT-X-VERSION:6
+## Generated with https://github.com/google/shaka-packager version <tag>-<hash>-<test>
+#EXT-X-TARGETDURATION:2
+#EXT-X-PLAYLIST-TYPE:VOD
+#EXT-X-MAP:URI="audio-init.mp4"
+#EXTINF:1.022,
+audio-1.m4s
+#EXTINF:0.998,
+audio-2.m4s
+#EXTINF:0.743,
+audio-3.m4s
+#EXT-X-ENDLIST
diff --git a/packager/app/test/testdata/bear-640x360-av-mp4-master-cenc-golden.m3u8 b/packager/app/test/testdata/bear-640x360-av-mp4-master-cenc-golden.m3u8
new file mode 100644
index 0000000000..b895318cfe
--- /dev/null
+++ b/packager/app/test/testdata/bear-640x360-av-mp4-master-cenc-golden.m3u8
@@ -0,0 +1,5 @@
+#EXTM3U
+## Generated with https://github.com/google/shaka-packager version <tag>-<hash>-<test>
+#EXT-X-MEDIA:TYPE=AUDIO,GROUP-ID="audio",NAME="stream_0",URI="audio.m3u8"
+#EXT-X-STREAM-INF:BANDWIDTH=1111147,CODECS="avc1.64001e,mp4a.40.2",RESOLUTION=640x360,AUDIO="audio"
+video.m3u8
diff --git a/packager/app/test/testdata/bear-640x360-av-mp4-master-golden.m3u8 b/packager/app/test/testdata/bear-640x360-av-mp4-master-golden.m3u8
new file mode 100644
index 0000000000..543dc9a79e
--- /dev/null
+++ b/packager/app/test/testdata/bear-640x360-av-mp4-master-golden.m3u8
@@ -0,0 +1,5 @@
+#EXTM3U
+## Generated with https://github.com/google/shaka-packager version <tag>-<hash>-<test>
+#EXT-X-MEDIA:TYPE=AUDIO,GROUP-ID="audio",NAME="stream_0",URI="audio/audio.m3u8"
+#EXT-X-STREAM-INF:BANDWIDTH=1105129,CODECS="avc1.64001e,mp4a.40.2",RESOLUTION=640x360,AUDIO="audio"
+video/video.m3u8
diff --git a/packager/app/test/testdata/bear-640x360-v-mp4-cenc-golden.m3u8 b/packager/app/test/testdata/bear-640x360-v-mp4-cenc-golden.m3u8
new file mode 100644
index 0000000000..ac1d7d58d8
--- /dev/null
+++ b/packager/app/test/testdata/bear-640x360-v-mp4-cenc-golden.m3u8
@@ -0,0 +1,17 @@
+#EXTM3U
+#EXT-X-VERSION:6
+## Generated with https://github.com/google/shaka-packager version <tag>-<hash>-<test>
+#EXT-X-TARGETDURATION:2
+#EXT-X-PLAYLIST-TYPE:VOD
+#EXT-X-MAP:URI="output_video.mp4",BYTERANGE="1091@0"
+#EXT-X-KEY:METHOD=SAMPLE-AES-CENC,URI="data:text/plain;base64,MTIzNDU2Nzg5MDEyMzQ1Ng==",KEYFORMAT="identity"
+#EXTINF:1.001,
+#EXT-X-BYTERANGE:99313@1159
+output_video.mp4
+#EXTINF:1.001,
+#EXT-X-BYTERANGE:122340
+output_video.mp4
+#EXTINF:0.734,
+#EXT-X-BYTERANGE:80067
+output_video.mp4
+#EXT-X-ENDLIST
diff --git a/packager/app/test/testdata/bear-640x360-v-mp4-golden.m3u8 b/packager/app/test/testdata/bear-640x360-v-mp4-golden.m3u8
new file mode 100644
index 0000000000..0f3fbe7f5a
--- /dev/null
+++ b/packager/app/test/testdata/bear-640x360-v-mp4-golden.m3u8
@@ -0,0 +1,13 @@
+#EXTM3U
+#EXT-X-VERSION:6
+## Generated with https://github.com/google/shaka-packager version <tag>-<hash>-<test>
+#EXT-X-TARGETDURATION:2
+#EXT-X-PLAYLIST-TYPE:VOD
+#EXT-X-MAP:URI="video-init.mp4"
+#EXTINF:1.001,
+video-1.m4s
+#EXTINF:1.001,
+video-2.m4s
+#EXTINF:0.734,
+video-3.m4s
+#EXT-X-ENDLIST
diff --git a/packager/file/local_file.cc b/packager/file/local_file.cc
index 46c1dfc024..cfc446b65e 100644
--- a/packager/file/local_file.cc
+++ b/packager/file/local_file.cc
@@ -105,8 +105,21 @@ bool LocalFile::Tell(uint64_t* position) {
 LocalFile::~LocalFile() {}
 
 bool LocalFile::Open() {
-  internal_file_ = base::OpenFile(base::FilePath::FromUTF8Unsafe(file_name()),
-                                  file_mode_.c_str());
+  base::FilePath file_path(base::FilePath::FromUTF8Unsafe(file_name()));
+
+  // Create upper level directories for write mode.
+  if (file_mode_.find("w") != std::string::npos) {
+    base::File::Error error;
+    // The function returns success if the directories already exist.
+    if (!base::CreateDirectoryAndGetError(file_path.DirName(), &error)) {
+      LOG(ERROR) << "Failed to create directories for file '"
+                 << file_path.AsUTF8Unsafe()
+                 << "'. Error: " << base::File::ErrorToString(error);
+      return false;
+    }
+  }
+
+  internal_file_ = base::OpenFile(file_path, file_mode_.c_str());
   return (internal_file_ != NULL);
 }