Amazon has reportedly dropped plans to come up with a bundled video service, according to a report from Reuters. Apple was also reported to have been working on a similar service, but it failed to bring the service to market following industry backlash.
Bundled video service – Amazon also fails
The online retailer scrapped the plans because it felt the service, which would have included popular U.S. broadcasting and cable networks, would not be profitable enough, says Reuters, citing sources familiar with the matter.
Apple, which was also reportedly planning to come up with a similar bundle of streaming channels at about $30 per month, shelved plans after it failed to convince the cable networks. Similarly, Reuters says that Amazon struggled to strike deals with broadcasting and basic cable networks as they were hesitant to part with their decades-old business models.
“Twenty-First Century Fox Inc., Viacom Inc. 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,” Reuters said.
Reports regarding Amazon’s plan to offer a bundled video service first came out late last year. At the time, the company was getting ready to allow Prime subscribers to buy other subscription video services. The service was more of a help to the users to manage multiple subscription services from one source. Back then, some reports noted that going forward Amazon would package some of the services that it is selling separately into bundles.
Now, it appears the plan has been scrapped altogether.
No ‘freemium’ version of Prime
Video is an important part of Amazon’s strategy to get more support for its Prime membership service. According to estimates, the company would spend about $4.5 billion or more on video content this year. To attract more users to its Prime service, the company earlier this week acquired global television rights to The Lord of the Rings.
Currently, a subscription to Amazon’s Prime membership costs $99. The membership gives access to a massive library of video streaming content, which is usually ad-free, along with a few other benefits. However, there were rumors recently that the company would soon come up with a new version of Prime service, which would be supported by advertisers.
Reports were that for the new version, Amazon would share user information and ad revenue with the content creators. However, Amazon turned down such rumors earlier this week, saying it has no plans to launch any such version.
“We have no plans to create a free, ad-supported version of Prime Video,” the company told The Verge.
A “freemium model” could have been helpful to the company in getting more users. Popular movies and TV shows are one reason why people register for the Prime accounts. So, a free version would have attracted many viewers. These users could have been encouraged to sign up for the ad-free version that also offers other benefits like free two-day shipping, early access to deals and more.
In pre-market trading today, Amazon shares were down slightly. Year to date, the stock is up almost 52%, while in the last one month, it is up over 13%.
