Amazon Prime Video launches ads, expects huge revenue


Advertisements have now infiltrated Amazon Prime Video accounts – unless you pay $2.99 for an ad-free experience, that is. The move is risky but unique.

Many other streamers already have commercial breaks, but Amazon has chosen a different path. Whereas, say, Netflix subscribers could keep their ad-free plan at the original cost but could switch to the ad-based one for less cash, Prime Video has automatically rolled out ads to all members.

In the United States, for now, Prime Video users have to proactively opt-in to pay an extra $2.99 per month to get the ad-free tier. Later this year, ads on Prime Video will debut in other markets.

Amazon Prime currently costs $14.99 per month in the US and €8.99 ($9.93) per month in Germany. The annual rates are $139 and €89.90 ($99.35) respectively.

However, in the US, subscribers also enjoy free 2-day shipping from the e-commerce giant and other perks such as Amazon Music, Amazon Pharmacy, and Amazon Fresh, a grocery-delivery service.

All this has actually been known for more than a month now. What’s new is the Amazon presentation – a pitch to advertisers – reviewed and reported this week by The Wall Street Journal. The future is bright, Amazon thinks.

For instance, ads on Prime Video – again, they’re the default for all users – are expected to reach around 159 million global viewers each month. That really is a lot of eyeballs – for comparison, there are 23 million users of Netflix’s ad-based tier.

According to Bank of America research analyst Justin Post, Amazon can expect $3 billion in potential ad revenue yearly. An extra $1.6 billion could be made from the ad-free Prime Video upcharge.

In the presentation, Amazon also said that Prime Video will have “meaningfully fewer ads” than linear TV and other streamers – the ad load should be between two and three-and-a-half minutes per hour. Some ads will play before content begins, while others will interrupt programming.

Some defections are probably unavoidable because many users have just gotten used to watching content with no ads. Moreover, one could expect to not pay for entertainment at all if ads are shown.

In fact, that’s probably why free ad-supported streaming TV (FAST) services are now thriving.

Some providers such as Tubi or Pluto have hundreds of channels ranging from broadcast news to niche offerings for genre (sci-fi- western, true crime) and films or TV series on demand. What FAST doesn’t have are monthly subscriptions.

According to Samba TV’s 2023 “State of Viewership” report, one in three Americans regularly watch a FAST provider, even as Nielsen reports that viewership of linear TV in 2023 dropped below 50% of American households for the first time ever.


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