Only 20% of Prime Video Customers Are Now on Ad-Free Plan, and That’s Exactly How Amazon Wants It
A new report from E-Marketer suggests that so far, only 20% of U.S. customers have upgraded to an ad-free plan of Prime Video.
The migration of customers to ad-supported plans can be a slow, tortuous process for streamers. Netflix rolled out its first ads plan in November 2022, but by January just 5% of its customers said that they were thinking about making the switch. It took a year for Netflix to build a customer base of 23 million users on its ad-supported tier. Perhaps, in part, because of this slow adoption, Amazon and its subscription streamer Prime Video decided to fast-track the process and force all of their customers to adopt the more profitable subscription option. Prime Video rolled out ads for all existing customers in January, requiring customers to actively upgrade to ad-free if they wanted to avoid commercials in their streaming service. Now, a new report from E-Marketer suggests that 80% of its customers in the United States have elected to keep the ads plan rather than pay extra for an ad-free tier.
- Prime Video has the highest percentage of U.S. viewers on its ads plan of any streaming service.
- E-Marketer reports that Prime Video will have more than 130 million ad-supported American customers this year.
- In total, Prime Video has more than 200 million global customers.
The report from E-Marketer shows that, thanks to approaching the shift in a unique way, Prime Video’s ad-supported customer base is already the largest by far among subscription video-on-demand (SVOD) streamers. Even platforms like Paramount+ and Peacock, which have had ads plans for years, don’t have as high a percentage of their subscriber bases using their ad-supported tiers.
Disney+ first introduced an ad-supported plan in December 2022, one month after Netflix. In its last earnings report, Disney revealed that it had 46.1 million customers between the U.S. and Canada. E-Marketer’s data shows that 25% of Disney+ customers in the United States are on the ads plan, if that is accurate, that would equal roughly 11.5 million customers not accounting for Canadian subscribers. Like Netflix, Disney has had to earn its ad-supported subscribers the hard way, by convincing customers already accustomed to ad-free streaming to switch over.
But Prime Video hacked that process by simply forcing all of its existing viewers to accept ads, pay $2.99 per month extra to go ad-free, or cancel their service. Many customers were angered by Amazon’s decision to make Prime Video’s ads plan the same price that they had been paying for the ad-free service, rather than introducing a cheaper ad-supported offering, but it appears that the company’s strategy has paid off quite handsomely.
Will Success of Ads Plan Delay a Prime Video Password-Sharing Crackdown?
One key to Netflix finally attracting large numbers of customers to its ads plan was the rollout of password-sharing restrictions in May 2023. Subscribers to the ad plan steadily increased once those restrictions were introduced, aided by the fact that Netflix made choosing the ad tier cheaper than paying to add extra, non-household members to an account. By the fourth quarter of 2023 40% of all new Netflix signups were for the Standard with Ads plan.
Disney+, Hulu, and ESPN+ are planning to enact a password-sharing crackdown in June in some countries, ahead of a wider global rollout in September. Much like Netflix, Disney is likely hoping to drive even more customers to its ad-supported plans by compelling viewers who are sharing accounts to either buy a subscription of their own or lose access to the shows and movies they like.
But since Prime Video rolled out ads in the method it did, it does not have to worry about trying to drive more customers to its ad plan. The company could still introduce password-sharing restrictions to try and acquire more Prime Video subscribers, but the need to do so to build up its ad-supported tier is clearly not urgent for the company. There have been no announced plans to restrict account sharing by Prime Video viewers as of yet, and the success of its ad-plan rollout may indicate they aren’t forthcoming any time soon.
Ad plans allow streamers to double-dip in revenues collected, as they take in subscription dollars as well as money from advertisers. Considering Prime Video officially has more than 200 million subscribers around the world, the checks it pulls in from ad agencies based on the number of impressions they make on Prime Video will be hefty indeed. Only 20% of its American customers have upgraded to Prime Video’s ad-free plan, and that’s just the way Amazon wants it.
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.