Log Shipping Alternative In our current environment we have about 40 databases on one instance all being log shipped and configured as Standby/Read Only. About 90% of those are for reporting purposes and others for read only. The number of failures and maintenance plus user complain about not being able to access the databases when logs are being restored has forced us to rethink about this feature and we are strongly thinking of moving to Replication.

My main concern is can the Replication feature handle this many databases if we put our distributor on a separate instance? Shall we have one distributor or more than one? The network is handling the log shipping very well and I assume network bandwidth will not be an issue.

If replication is not a good option then what other option would be better that requires less maintenance or more importantly less failures.  

We are on Amazon Cloud Infrastructure. 

any input will be appreciated.
You could consider Availability Groups for your databases. Since you are using them for reporting/read-only already then you already have licenses for your secondary instances.

This will allow better access to your secondaries as it does not need to take the database offline for updates - your data will also be more up to date as it is a constant flow of transaction log updates rather than batched backups.