From Massively OP and Blomberg news, the Lord of the Rings MMO that Amazon was working on has been cancelled. If you dig into the Blomberg piece and the companies involved, a surprisingly convoluted story emerges.
Apparently the Lord of the Rings game was being developed by both Amazon Game Studios and another less well known company I had never heard of. A Chines FAX machine repair service, turned poultry product manufacturer, turned game developer called Leyou Technologies. The company also changed hands several times during all this and, after finally settling on video game development, secured the rights to create an online RPG based on the Lord of the Rings from Middle Earth Enterprises in 2018. By the end of 2018 a FtP online game set in Middle Earth was already in development. In 2019 Amazon formed a partnership with Leyou to complete the game and to publish it in the US and other markets outside of Asia. Despite the game generally being referred to as "Amazon's Lord of the Rings MMO," a lot of the development seems to have actually been underway at Athlon Games. Athlon is an offshoot of Leyou founded specifically to publish games in the US. All of this makes me wonder how the agreement between Athlon/ Leyou and Amazon happened in the first place. Was Leyou having trouble with the US market?
In December 2020 Leyou was was purchased by Tencent Holding's. I assume that at least part of the reason they acquired Leyou was to get access to the Lord of the Rings license. Tencent is a very large company, reportedly worth more than $500 billion. Unlike Leyou, they were probably able to negotiate with Amazon on a pretty even footing. For example if the negotiations went badly and the entire game disappeared in a puff of lawyers (as it apparently has), it really won't affect Tencent very much at all. What, if anything, Tencent tried to renegotiate with Amazon no-one has said. However, the net effect of the purchase was "contract negotiations" between Tencent and Amazon, which eventually broke down and caused Amazon to lose the rights to publish the game.
So it sounds like whatever was being produced at Amazon Game Studios specifically will never see the light of day. However one thing that the Blomberg story does not emphasize is that Tencent is a specialist in video game development and internet technology. If Tencent wants to use whatever parts of Leyou's game they still own to create a complete game, they certainly will be able to. I also assume they still have the LoTR license because the agreement with MEE and Athlon predates Amazon's involvement. The license also seems set to become quite valuable. Amazon's streaming program, the first two seasons of which are rumored to be very nearly be the most expensive series ever produced by humans, is getting ready to come online soon. It seems almost guaranteed to be a big hit, and has the potential to create a lot of demand for video games set in Middle Earth.
So to summarize, Tencent may still own whatever Leyou created before Amazon got involved, and it was being developed as an online FtP multiplayer game of some sort. It could be that Tencent realized they had a very valuable game, or at least license, on their hands and decided they didn't want to share it with Amazon under the original terms that Leyou negotiated. In terms of MMOs, the only real competitor to a new Lord of the Rings MMO is getting a bit long in the tooth, and is run by a studio that increasingly seems to have little interest in appealing to audiences beyond their existing core user base. Leyou was focused on the Asian market, and something will almost certainly still come out there in time to take advantage of all the hype around the Amazon show. Whether that game will be anything that would appeal to Western audiences, or come out here in the US at all, remains to be seen.
Adding spice to the entire mix, presumably at some point EG7 will have something to say about the focus the existing Lord of the Rings game. So far they have seemed happy to step aside while SSG doubles down on systems that seem designed around extracting more money from existing users. This could all get very interesting in the next year or so, especially if the Amazon show is a big hit.