Prime Video could become one of largest ad-supported streamers overnight
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John Moulding
| 09 October 2023
1 Prime Video could become one of largest ad supported streamers overnight

Amazon’s Prime Video will include ads in multiple markets starting in 2024. The roll-out will begin in the U.S., Canada, UK and Germany. The Ad-supported tier becomes the default offering for consumers that choose to do nothing, with an ad-free option made available.

The introduction of advertising will expand during 2024 to France, Italy, Spain, Mexico and Australia. Ads will appear within shows and movies on Prime Video.

Amazon says the price of Prime membership (which includes the Prime Video service) will remain the same in 2024. No action is required by users, who will be sent an email several weeks before ads are introduced to offer them an ad-free option. The zero-ads option will cost ‘an extra’ $2.99 per month in the U.S. The ad-free pricing in other markets has not yet been announced.
Amazon is promising “meaningfully fewer ads than linear TV and other streaming TV providers”. Using the U.S. as a benchmark, Netflix promises around 4 minutes per hour of advertising in its ad-supported tier, and AMC+ says it will have less than five minutes.

Amazon says the introduction of ads (and an ad-free charge) is to ensure it can “continue investing in compelling content and keep increasing that investment over a long period of time”. As well as Originals, the company has moved into live sports rights acquisition, of course, with (limited) Premier League Football in the UK and NFL Thursday Night Football in the U.S. as key examples.

Comment:

There is a powerful trend towards the addition of ad-supported tiers to premium streaming services that were once ad-free, such as Netflix, Disney+ and AMC+. With Prime Video joining the list, advertisers gain another pool of viewers who had moved beyond their reach when not watching broadcast linear TV.

Notably, it can be argued that Prime Video begins life as a free service, as it is bundled as part of a Prime offering that many consumers take because of the free Amazon delivery (costing $14.99 per month in the U.S. and £8.99 per month in the UK). In the cases of Netflix, Disney and AMC, success for the ad-supported tier relies on migrating customers from higher paid ad-free tiers to lower-priced ad-supported tiers, or a steady influx of new sign-ups to the ad-supported tier.

Prime Video is different; it should probably be considered as a free ad-free service (a rare specimen!) that will now charge (albeit a low subscription) to remain ad-free. Whereas the ‘do nothing/consumer inertia’ option at most major international streamers introducing ads is for people to keep avoiding ads, the ‘do nothing’ option at Prime Video is to start seeing ads.

We will leave the forecasting to analyst groups, but it looks like Prime Video could become a major ad-supported streaming service overnight next year.