Breaking: Amazon Reportedly Planning to Launch Ad-Supported Prime Video Tier
What do you get a tech company that has everything? More revenue streams, it appears. On Wednesday, the Wall Street Journal reported that Amazon is preparing to launch an ad-supported tier of its previously ad-free streaming service Prime Video. This should not come as a surprise for onlookers as the entire streaming industry has been moving towards ad-supported streaming, but also Amazon began looking to hire executives for ad-supported video on demand (AVOD) and free ad-supported streaming TV (FAST) positions last fall.
Nonetheless, with another major service expanding its offerings into ad-supported streaming, Amazon follows Netflix and Disney+, which both added lower-priced ad-supported tiers in late 2022. Like its tech company brethren, Apple began hiring executives with ad-supported streaming experience earlier this year, so an Apple TV+ option that features ads might very well be coming soon as well.
According to the WSJ, conversations around Amazon’s ad tier have picked up in recent weeks following cost-cutting efforts within the company that led to thousands of employees losing their jobs. Across the industry, ad-supported streaming has proven to generate more revenue than the traditional ad-free premium option, because companies are able to still charge an admittedly lower subscription rate, but more than make up the difference in advertising revenue. Therefore, there has been a rush for streaming services to diversify their package offerings in order to capitalize. Some analyst estimates indicate that Netflix will generate an extra $5.5 billion in the first five years of its ad-supported plan.
Not only do ad-supported subscription plans drive more revenue than their premium counterparts, but they also serve as an easier on-ramp for cost-conscious consumers looking to add a service at a lower rate.
The WSJ report classifies the company’s discussions as being in their “early stages,” so it is not expected that the addition of an ad-supported tier is forthcoming. Currently, Prime Video is available two ways; as part of the $14.99 per month Amazon Prime membership, which also includes free shipping on certain retail purchases and $8.99 as a standalone service.
Prime Video is no stranger to advertising in its content as its exclusive NFL package “Thursday Night Football” includes traditional commercial breaks and the service has been experimenting with shoppable ads and product placement in recent years. Amazon has also been investing heavily in its FAST service Freevee.
Amazon does not report subscriber totals for Prime Video, but in December, research firm Parks Associates released a study that indicated that the streamer had more paid customers in the United States than Netflix. Though Netflix does not break down subscribers by country, as of the time of Parks’ report, the world’s largest streamer had 73.39 million subscribers in the U.S. and Canada combined.
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.