The Story:

Amazon has apparently scrapped its plans to launch a “skinny bundle” service that would include content from popular cable and broadcast networks in the United States, per a Reuters report citing people familiar with the matter.

Important Because:

Amazon is very serious about its streaming video service, Prime Video. Just recently, the company poured nearly $250 million for television rights to J.R.R. Tolkien’s Lord of the Rings franchise.

JPMorgan says Amazon is ready to spend up to $4.5 billion towards building its video content. Although that figure is overshadowed by Netflix’s content commitment of $7 billion to $8 billion, it’s significantly more than the $1 billion that Apple announced towards its own original content for Apple Music.

Still, numbers do tell a compelling story. If Amazon is putting that much money into the project, it means the company is going all out to increase the value that its tens of millions of Prime customers all over the world get from the subscription service.

This Happened:

Amazon was looking to offer a range of TV channels through Prime. The original plan was to offer a limited bundle of broadcast and cable networks for a fixed fee, similar to what you’d see on Hulu or YouTube.

This “skinny bundle” offering, to use an industry term, is a strategy to capture the younger demographic of viewers that are typically cord cutters but want the same content for easy subscription packages on their smartphones and tablets.

Amazon, however, now feels that the margins are just too thin for the effort to be worthwhile. In addition, it doesn’t feel that this is the direction the TV industry will eventually head to in the future, the sources told Reuters.

 

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