Amazon.com has ended its plans of launching a streaming service online that would bundle popular broadcast and cable networks in the U.S. because of its belief that it cannot earn sufficient money on that type of service, said those familiar with this matter.
The largest online retailer in the world has not been able to convince the key broadcast and cable networks to shift away from business models that are decades old and join its Amazon channels la carte service, said sources and it backed away from its talks with them.
This reversal comes just one month after an abrupt departure of Roy Price from the position of Amazon Studios head. AS is the high profile production division for television of the company. Price left following allegations of sexual harassment, which he contested.
This shows the difficulty Amazon has to change habits in the entertainment business in the U.S. in the way that it has done with cloud computing, retail as well as other areas.
Video is a hugely important tool for Amazon to generate subscriptions for tis $99 per year U.S. Prime membership service. It is currently on track to spend over $4.5 billion on its video programming in 2017, said analysts.
Earlier this week, Amazon created some controversy in entertainment with its purchase of the world television rates of The Lord of the Rings, as it plans a multi-season series in its attempt to attract more viewers to his subscription service.
Amazon is also looking at offering a wider variety of TV channels through its Prime membership. It aimed originally to offer just a limited bundle of important broadcast as well as cable networks for an established fee, similar to the offerings from Hulu and YouTube.
This type of offering, known as skinny bundling in the industry, is a way to capture younger viewers that are dropping the expensive, traditional satellite or cable TV packages for channels that are watchable on their tablets or smartphones.
However, recently Amazon has decided not to go forward with the service as it would not yield the profit margin it wanted and did not indicate necessarily the direction the business would eventually lead, said sources.
Amazon may still decide to re-change its course and to introduce skinny bundling, but talks have ended, said sources.
Instead, Amazon decided to put focus on building its Amazon Channels service where its Prime subscribers are able to subscribe to Starz, Showtime, HBO and other networks via a la carte basis.