November 16, 2017
Amazon has decided to cancel its plans to create an online streaming service that would have bundled broadcast and cable TV networks. The decision was reportedly based on the challenges involving how to generate a profit from the proposed service. The e-commerce giant has also experienced difficulties drawing interest from networks for its Amazon Channels a la carte TV platform. The company has been looking to leverage more television content, especially to attract younger cord cutters who are increasingly viewing media on mobile devices.
The decision to cancel the Internet TV plans follows last month’s abrupt departure of Amazon Studios chief Roy Price and may signal that the company is not ready to make the same impact in television as it has experienced in areas such as cloud computing and retail. While the timing may not be right for now, Amazon could revisit the concept in the future.
“Video has become an important tool for Amazon in generating subscriptions for its U.S. $99-a-year Prime membership service,” reports Reuters. “It is on track to spend some $4.5 billion or more on video programming this year, analysts estimate.”
Earlier this week, the company announced “the purchase of global television rights to ‘The Lord of the Rings,’ planning a multi-season series to draw more viewers to Prime.”
Amazon “offers the ability to add-on select channels, like HBO, Starz, Showtime, Cinemax, and others, via Amazon Channels,” notes TechCrunch. “But this selection, so far, is largely limited to those channels that are already available over-the-top through standalone subscriptions — not those that come bundled in larger TV subscriptions, like broadcast networks or top cable channels.”
However, in regards to the future direction of pay TV and the bundling model, Reuters suggests that Amazon “known for taking a long-term view of businesses, is willing to wait.”
“It is working on the assumption that as pay-TV subscriptions decline over time, more TV networks will be tempted to go direct to consumers online and therefore be available for Amazon Channels.”