Ads Will Allow Prime Video to ‘Meaningfully Invest’ in New Content, Exec Says
Amazon held its quarterly earnings report conference call this week, and executives fielded several questions from analysts about ads on Prime Video.
If there are three sure things in life, it’s death, taxes and Amazon turning in a profitable quarterly earnings report. The e-commerce platform has so many revenue streams that a quarterly loss would be a huge upset, and one of those revenue sources — its subscription video-on-demand streamer Prime Video — is increasing the amount of money it pours into company coffers by introducing ads to its formerly ad-free main subscription tier. Discussing the earnings report with Wall Street analysts, Amazon executives had nothing but praise for the new arrangement, and gave viewers some idea of what to expect for the future of Amazon streaming.
- Amazon CEO Andy Jassey says that by converting Prime Video’s main tier to ad-supported, the company will be able to spend more on TV shows and movies for the service.
- CFO Brian Olsavsky says the company is looking to increase streaming ads, while simultaneously keeping ads per hour low.
- Amazon is highly unlikely to see a mass wave of cancelation from the introduction of ads to Prime Video.
Are Ads on Prime Video a Success Already?
It’s far too early for Amazon to declare ultimate victory from the introduction of ads to its main streaming tier on Prime Video, but executives are thrilled with the possibilities the new ad-supported focus can provide. Amazon CEO Andy Jassey told analysts that one of the main benefits to bringing on advertising would be more content for subscribers, citing shows like “Lord of the Rings: The Rings of Power” and “Reacher” as the type of content audiences could expect to continue flowing from Amazon thanks to the new infusion of revenue.
“We have increasing conviction that Prime Video can be a large and profitable business on its own, and we’ll continue to invest in compelling exclusive content for Prime members,” Jassey said. “And with the ads in Prime Video, we’ll be able to continue investing meaningfully in content over time.”
That statement would suggest that Prime Video is not profitable on its own already, but converting the vast majority of customers to ad-supported will certainly help in that regard. One report from Civic Science suggested that 22% of Prime Video subscribers may cancel their subscriptions because of the rollout of ads, but a huge churn reaction is unlikely given so many Prime Video subscribers have the service as part of their larger Amazon Prime membership, which provides numerous additional extra benefits that many customers will still think of it as a good value overall.
Will Ads Per Hour Spike on Amazon Streamers?
Audiences who spend lots of time with Amazon services like Prime Video, Freevee, or Twitch should expect to see more ads in more places going forward. Amazon’s chief financial officer Brian Olsavsky also spoke to analysts during the earnings call and said that each of Amazon’s streaming properties had more opportunities to incorporate ads.
“Advertisers are excited to access our Prime customer base,” he said. “We are looking for ways to increase our advertising in our streaming properties, including Fire TV, but also Prime Video, but also things like Freevee and Twitch. And it’s an important part of the total business model, and we expect it will allow us to have a healthy business to continue to invest in content and to continue to grow that.”
Fire TV device users first started seeing full-screen autoplay ads in November, but unlike other streaming device menus are doing nowadays, Fire TV does not show ads for non-entertainment products as of yet. Perhaps this is an indication from Olsavsky that’s about to change. The CFO did promise that Amazon streamer ad loads would not come close to what audiences are used to from linear TV.
Customers who are understandably annoyed with Amazon for shoving more ads down their throats won’t be happy to hear that more are on the way, but at the very least executives are promising that more ads will equal more content. Whether that’s lip service or a true prediction will be seen in the next couple of years, but Prime Video already has a huge content library, and adding to it is only getting more expensive, which is a big reason the streamer now plays with ads unless customers upgrade to an ad-free plan.
Amazon Prime Video
Amazon Prime Video is a subscription video streaming service that includes on-demand access to 10,000+ movies, TV shows, and Prime Originals like “The Lord of the Rings: The Rings of Power,” “Jack Ryan,” “The Marvelous Mrs. Maisel,” “The Boys,” and more. Subscribers can also add third-party services like Max, Showtime, STARZ, and dozens more with Amazon Prime Video Channels. Prime Video also offers exclusive live access to NFL Thursday Night Football.