Amazon has been in rates negotiations with TV networks for quite some time, but the company hasn’t seen much success. According to a report from Reuters, Amazon has decided to scrape its plans to introduce a pay-TV bundle. Amazon has decided to do this because it isn’t able to reliably turn a profit in the service.
The company was planning to include this service as a part of its Amazon Channels service, which is the company’s current cable subscription offering that allows customers to subscribe to channels such as HBO, Showtime, and the company’s new anime streaming service. There are more than 100 other cable and digital-only networks.
Reuters reports that Amazon wasn’t able to convince networks to break the cable bundling model they’ve stuck with and offer the more popular channels as a more standalone option. The networks rates weren’t sitting well with Amazon, nor was Amazon willing to pay at such rates.
In the past, Amazon, Google, Verizon, and other companies have faced the same issues with networks. These companies have tried to negotiate with networks to bring down costs for themselves and expand accessibility of digital pay-TV bundles, however, networks have never budged. As it stands, rights owners still have large control over how TV is packaged and distributed, which is why companies like Apple and Amazon have been unsuccessful in negotiating rates.
While Amazon is abandoning its pay-TV bundle service, the company is still focused on pricing original content for its Amazon Video library. The company is even working on a new television series based on The Lord of the Rings. Reuters points out that Amazon may just be biding its time, waiting for cable subscriptions to accept the a la carte model when they start to lose leverage in the market.