Online retail giant Amazon has reportedly scrapped plans to launch a so-called skinny TV bundle for a set fee as content owners are reluctant to break with decades-old business models revolving around the traditional cable bundle.
People familiar with the matter told Reuters that Amazon does not believe it can make enough money on such a service, but that’s just part of the problem—it’s been unable to convince key broadcast and basic cable networks to join its existing Channels service.
For now, Amazon has backed away from talks with content owners. Even though the talks are over, Amazon could still decide to introduce a skinny bundle at some point in the future.
Twenty-First Century Fox, Viacom and other media firms typically require cable companies or other partners to take their weaker channels along with their stronger ones, to prevent the weaker ones withering on the vine.
Amazon did not want to do that.
It also asked networks for provisions that are foreign to the entertainment business, including discounts based on the volume of subscribers it brings in. ‘That might be standard in selling, but it is not how it works with content,’ said one industry source.
Amazon Channels lets Prime customers subscribe to more than 140 television and digital-only networks in the United States on an a la carte basis, including HBO, Showtime and Starz, making these standalone subscriptions available through the Amazon Video app.
Amazon on Monday purchased global TV rights to “The Lord of the Rings,” planning a multi-season series to draw more viewers to its $99 per year Prime service. Analysts estimate that the company is on track to spend approximately $4.5 billion or video programming this year.
Amazon has basically run up against the same obstacle that has stymied Apple and Verizon in their efforts to launch TV services. As you know, Apple too was rumored for years to launch a skinny bundle of premium TV programming.