Amount of Streaming Customers Using Ad-Supported Plans Jumps 10% After Prime Video’s Ad Rollout
New data from Hub Research shows just how big of an impact the introduction of ads to Prime Video has had on the streaming industry.
By all accounts, Prime Video handed advertisers a significant gift when the streamer rolled out its ad plan at the end of January. Amazon followed a unique strategy with the launch of its ad-supported tier; instead of creating a lower-cost option with ads for customers to choose, the streamer simply moved all current customers to the ad tier without changing the price, requiring them to pay more for an ad-free option. New data from Hub Research is highlighting how many Prime Video subscribers simply accepted the move, and how that has impacted the state of ad-supported streaming as a whole.
Key Details:
- In total, 85% of Prime Video customers are now on its ads plan, the highest proportion of any service.
- After Prime Video’s ad launch, the total number of streaming customers who use only ad-supported plans jumped 10 percentage points industry-wide.
- Having the additional revenue from ad-supported customers could help Amazon pay for its new package of NBA rights.
The data from Hub shows that Prime Video has largely kept its customer base subscribed to the ad-supported plan after its introduction. In total, 85% of respondents reached by Hub indicated that they are signed up for the ad tier of the streamer, versus just 15% who identify themselves as ad-free customers. These numbers are in line with an April report from E-Marketer which found that around 80% of Prime Video customers were using the ad plan.
Crucially for Prime Video, the decision to launch ads on its existing streaming tier instead of creating a new, lower-cost option with ads for customers to pick from has not created a large cancel reaction for the streamer. At the end of the fourth quarter of 2023, 55% of Hub participants said they were Prime Video subscribers; at the end of the first quarter of 2024 — the first quarter in which ads were shown on the streamer — the number jumped to 57%. Hub’s data also shows that AMC+ was able to maintain its customer base after rolling out an ads plan last fall.
Prime Video has over 200 million customers, making it one of the largest streaming platforms in the world. When it makes big moves like the rollout of an ad plan, it has a customer base large enough to ensure that there are ripple effects that spread through the entire streaming industry when Prime Video makes a big change. Hub provides an excellent example of this in its latest report, showing that when Prime Video rolled out its ad-supported plan, the number of customers using just ad plans rose 10 percentage points industry-wide.
“Virtually overnight, Amazon Prime Video dramatically transformed the video advertising ecosystem,” said Mark Loughney, Senior Consultant to Hub. “Suddenly advertisers have the ability to reach tens of millions of viewers on one platform, with robust targeting capabilities and a vast retail capability. Amazon has immediately launched themselves into ‘must buy’ territory for advertisers and media agencies.”
What Will Prime Video Do With its New Revenues?
It will take a while before Amazon sees ad revenues start to flow meaningfully into its pockets, even with so many customers now watching its ad plan. Nevertheless, the company has already started plotting out what it will do with the extra revenue generated by having hundreds of millions of viewers watching its ad-supported streaming plan.
At the end of April, it was reported that Prime Video had an agreement in principle with the NBA to acquire a portion of that league’s national regular season and playoff rights in its new broadcast deal. The new agreement will take hold in 2025-26, and though no deal has officially been signed yet, it would take a rival with incredibly deep pockets to outbid Amazon for the package of games. No financial terms have been released, but it’s been widely reported that the NBA wants to at least double the ~$2.6 billion per season it makes from its current deal with ESPN and TNT.
That may not be the end of Amazon’s sports ambitions, either. The streamer recently agreed to license a package of NHL games in Canada for the next two seasons, and could decide to pursue those games again if the experiment proves a success. Prime Video has invested heavily in technology to help it cut down on delays during streams of live events like sports, and it is hot on the trail of any sports rights it thinks can help boost engagement among viewers.
Customers may have looked askance at Prime Video’s strategy of telling them to either stomach ads or pay more to stream without them, but any anger generated by the move clearly did not translate into a large cancel reaction. Amazon’s streaming service is primed to lock up the NBA and go after any other assets it wants as it boosts the amount of revenue it pulls in thanks to its highly successful ad rollout.
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.