Report: Prime Video Leads All Services in Subscriber Churn; Will Introduction of Ads Increase Number of Cancelations?
Prime Video has the dubious distinction of being the most-canceled streamer on the market, and its new strategy may exacerbate the problem.
Prime Video executives likely love the fall. That’s when the NFL season kicks off, and when Prime Video gets exclusive access to national broadcasts of “Thursday Night Football,” which always draws a relative stampede of viewers even if “TNF” audiences don’t quite measure up to Sunday afternoon telecasts.
- New survey from Interpret states 23% of users say they’ve canceled Prime Video in the past six months.
- Prime Video is introducing ads for all current users in the near future.
- Offering Prime Video as a benefit to all Prime customers could mitigate big churn numbers.
Seeing is Believing
It can be hard to fathom that Prime Video could be among the leaders in customer churn. After all, while the service does not report its subscriber numbers regularly, the hundreds of millions of Prime customers who get Prime Video free with their subscription are not likely to say goodbye to all the benefits of that service just because their streaming video will soon have a few more commercials than it used to.
But new data from Interpret suggests that Prime Video is currently the most canceled streaming service in the last six months of any top platform in the United States. Twenty-three percent of American streaming users have canceled a Prime Video subscription in that time, just ahead of the 21% who say they’ve ditched Hulu in the same timeframe.
More Ads, More Problems?
There’s a good chance that Prime Video saw a temporary spike in cancelations when the news began to circulate that it was introducing ads for all current subscribers in 2024. Users will have to pay $2.99 per month more to stream Prime Video without ads, either as part of their overall Prime subscription or just for Prime Video itself. Reports first surfaced regarding Amazon’s plans to bring ads to its streaming platform in late September.
The strategy of forcing users to either accept ads or take the steps necessary to upgrade to an ad-free plan is shrewd, to say the least. Ad-supported streaming plans bring in significantly more average revenue per user (ARPU) than ad-free ones do, and Prime Video is about to apply that revenue increase to hundreds of millions of customers automatically. This helps the company sidestep issues Netflix is currently having in getting its users to adopt ad-supported plans; recent reports indicate Netflix will hike prices on its ad-free plans yet again in the coming months.
Those gains in ARPU will help Prime Video offset losses caused by users who don’t want to put up with commercials, but that’s the flipside of Amazon’s strategy in this case. By shoehorning ads onto its already-existing Prime Video plan, customers have nowhere to downgrade to. Their choice becomes to accept commercial-supported streaming or cancel, which may lead to a bigger churn rate than streamers like Max or Paramount+ see when they raise prices on their ad-free tiers.
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.