Prime Video Continues to Be Key Driver of Amazon Prime Sign-Ups Ahead of Transition to Ads
Prime Video Continues to Be Key Driver of Amazon Prime Sign-Ups Ahead of Transition to Ads
Amazon released its quarterly earnings report this week, and said that Prime Video looks very healthy as it prepares to transition to ad-supported streaming.
Prime Video is the most-canceled streaming platform of all currently, according to a recent survey. But if Amazon executives are perturbed by that statistic, they didn’t show it this week during the company’s conference call to discuss its quarterly earnings report with Wall Street analysts.
- Prime Video is one of the top drivers of users signing up for Amazon Prime.
- Ratings for “Thursday Night Football” are up 25% over the first six weeks of 2022.
- Amazon is set to convert its current ad-free tier to ad-supported and launch a more expensive plan with no commercials in 2024.
How Important is Prime Video to Amazon?
Observers would be forgiven for looking at Amazon and thinking that Prime Video isn’t one of its most important segments. Surely Amazon makes more from its huge e-commerce platform, right? While online shopping and ads do make up the bulk of Amazon’s revenue, Prime Video is a key driver of subscription acquisition for Amazon Prime, according to the company’s president and CEO Andrew Jassy.
“Prime Video continues to be an integral part of the Prime value proposition where it’s often one of the top 2 drivers of customers signing up for Prime,” Jassy said. “We also have increasing conviction that Prime Video can be a large and profitable business in its own right as we continue to invest in compelling exclusive content for prime members, but also offer the best selection of premium streaming video content anywhere with our marketplace offering, including channels for customers who can subscribe to channels like Max, Paramount+, BET+ and MGM+, as well as our broad transactional video-on-demand selection.”
Amazon never reveals hard data like subscriber numbers for Prime Video during earnings reports, so this is as much as observers can ever expect the company to say publicly about its streamer. But executives did let one tidbit slip, namely that “Thursday Night Football” has seen 25% better ratings through six weeks of the NFL season in 2023 than it did in the same period in 2022. Through 10 weeks last year, Prime Video was averaging between 10-11 million viewers per game, but that number dropped to an average of 9.6 million by season’s end.
The launch of Prime Video Channels in markets like Chile and Colombia also improved the distribution of video content by Amazon, and it’s a good bet the platform will make its way to more territories in the coming months.
Ads are On the Way
During the earnings call, executives also briefly touched on Amazon’s plans to convert all of its users to an ad-supported tier by 2024. The current tier of Prime Video will see commercials incorporated, and users who want to remain ad-free will have to upgrade to another plan for $3 per month more.
“As we continue to invest in compelling content, beginning in early 2024, Prime Video shows and movies will include limited advertisements,” Jassy said. “We aim to have meaningfully fewer ads than linear TV and other streaming TV providers. If customers prefer an ad-free option, we plan to offer that for an additional $2.99 per month for U.S. members. There is still a lot of work to be done in innovation ahead, but we’re excited about our future on Prime Video.”
Amazon’s advertising business already brings in heaps of cash. It made $12 billion in ad revenues during the third quarter, up 26% year-over-year. As advertisers look for any methods possible to help lift sagging revenues, the introduction of ads for all Prime Video subscribers will be seen as a godsend.
As usual, hard numbers surrounding Prime Video were hard to come by in Amazon’s third-quarter earnings report. But the video service does continue to drive big acquisitions for Amazon Prime, and Prime Video has seen 25% higher ratings for “TNF” than it did through six weeks of the 2022 season.
Prime Video
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 Prime Video Channels. Prime Video also offers exclusive live access to NFL Thursday Night Football.