- Amazon is considering introducing an advertising-supported tier for its Prime Video streaming service to boost its ad business and increase entertainment-related revenue.
- The advertising sector has been a key growth area for Amazon, which brought in $9.5 billion in ad revenue in the first quarter, marking a 21% year-over-year increase.
- Amazon might introduce more ads to existing Prime subscribers and offer them the option to pay more for an ad-free version, a strategy similar to what it used for Amazon Music.
- The move could help cover the costs of creating Amazon’s original shows and movies, aligning with current CEO Andy Jassy’s focus on the profitability of its different businesses.
- Amazon’s potential ad-supported tier could also help fund its interest in acquiring streaming rights to future events, such as NBA games, which it is reportedly considering bidding for in 2025.
As reported by the Wall Street Journal, Amazon‘s video streaming service, Prime Video, might be getting a version that’s supported by ads.
The aim is to grow Amazon‘s advertising business and increase revenue from the entertainment sector.
This is still in the discussion stage and comes as the company’s been looking to trim costs and has laid off quite a lot of people.
Despite some tough economic times, advertising has been a growth area for Amazon.
Its ad income was $9.5 billion in the first quarter, a 21% increase from last year.
In the digital advertising space, Amazon is behind only Google and Meta.
People who buy ads are excited about this idea, as it mirrors similar steps taken by Netflix and Disney.
They’re eager to put ads in front of Amazon’s popular movies and shows that have mostly been ad-free so far.
Prime Video, which costs $14.99 a month for Amazon Prime members and $8.99 a month for others, offers original shows like “The Marvelous Mrs. Maisel” and a big collection of movies and live sports like NFL’s “Thursday Night Football”.
Amazon has already been experimenting with adding more ad-supported content to Prime Video.
Its sports programs come with ads, and some shows have product placement ads.
They’re also considering adding the ad-supported tiers of other streaming services like Warner Bros. Discovery and Paramount Global to Prime Video.
One way Amazon might introduce ads to Prime Video is to add more ads for existing Prime subscribers and offer them the option to pay more for an ad-free version.
Amazon Music took a similar route, giving Prime members access to more songs for free, but removing the option for on-demand unless users opt for a more expensive upgrade.
All this is part of Amazon’s plan to cover the costs of making its shows and movies.
Its current CEO, Andy Jassy, is more interested in making money from the various businesses than just growing them. For instance, Amazon spent about $7 billion last year on original shows, live sports, and licensed video content.
Before Jassy, the former CEO, Jeff Bezos, had a more growth-focused approach, even paying a whopping $250 million for the rights to make a new “Lord of the Rings” series, which ended up costing $715 million for just the first season.
While the plans aren’t set in stone, if Amazon does decide to introduce an ad-supported tier for Prime Video, it could also help pay for streaming rights to future events like NBA games, which Amazon is reportedly considering bidding for in 2025.
Amazon‘s potential introduction of an ad-supported tier for Prime Video is a move that is expected to increase the company’s revenue and advertising business.
While ads on streaming services have been successful for other companies, it is worth considering the impact it may have on the user experience.
Prime Video has been a popular choice for users seeking ad-free content, and introducing ads may lead to frustration among subscribers.
It’s also uncertain whether the revenue generated from ads will cover the costs of creating original shows and movies, especially given the high costs associated with producing content.
Furthermore, there is a potential that ads could become intrusive and disrupt the viewing experience, which may further decrease user satisfaction.
As Amazon seeks to expand its advertising business and cover costs, it must also prioritize the overall quality of its streaming service and the satisfaction of its users.
While introducing an ad-supported tier for Prime Video may present a new source of revenue for the company, it’s important to balance this with user experience and maintaining the quality of its service.
Ultimately, Amazon must proceed with caution as it explores this option and consider both the potential benefits and drawbacks.