Get the latest updates on Streaming services for free.
Subscribe to our myFT Daily Digest email and stay informed about the latest Streaming services news every morning.
Amazon has implemented a major change in its video strategy for Prime Video, stating that customers who watch its popular TV shows and movies will now be subjected to advertising unless they pay an additional fee. This move will gauge the willingness of Amazon Prime members, who already pay up to $139 (£95) annually, to tolerate the inclusion of advertising during their viewing experience for the first time. It follows the footsteps of streaming competitors like Netflix and Disney+ who have recently introduced ad-supported subscription tiers.
The announcement comes as Amazon continues to expand its advertising services throughout its platforms, including charging third-party sellers to promote their products on its retail store. Advertising has proven to be a highly profitable revenue stream for Amazon, with ad revenue nearly doubling from $20bn in 2020 to $39bn by 2022.
Amazon stated in a blog post that its Prime Video content will include “limited” advertisements starting early next year, allowing the company to continue investing in TV content and increase its investments over the long term. Moreover, Amazon aims to have “significantly fewer ads than linear TV and other streaming TV providers.” In the US, customers will have the option to pay an additional $2.99 per month for an ad-free experience, while pricing details for other countries have yet to be released.
Unlike most other streaming apps, all Prime members will automatically be enrolled in the ad-supported service when it is implemented next year. Amazon plans to send emails to Prime members providing instructions on how to sign up for the ad-free option. Advertising on Prime Video will be introduced in the US, UK, Germany, and Canada in early 2024, followed by France, Italy, Spain, Mexico, and Australia later in the year.
This pricing model change for Prime Video carries risks for Amazon, as the streaming service is not as core to the company’s business as it is for Netflix. Tech analyst Benedict Evans noted that Prime is not only a revenue stream but also an important marketing tool that drives increased purchasing and contributes more than just the subscription fee to Amazon’s overall revenue.
Larger US streaming services have faced pressure from investors to reduce spending on TV and film content, which was seen as necessary in the race for subscriber growth. For example, Amazon’s spin-off series The Rings of Power from Lord of the Rings was reported to be one of the most expensive TV shows to produce per episode.
However, streaming services have experienced a slowdown in subscriber numbers in key markets due to the rising cost of living and increased competition. To address this, many services, including Netflix, Disney, Paramount, and Warner Bros Discovery, have raised prices to boost profitability. Additionally, these streaming platforms have also introduced advertising on lower-priced tiers to generate new revenue streams and offer more affordable subscription options to households.
Amazon has confirmed that it will not raise the cost of its Prime subscriptions in 2024. Disney CEO Bob Iger revealed that their ad-supported service, priced at $7.99 per month, has already gained 3.3 million subscribers. There are also expectations that Apple will introduce layers of advertising across its services.
In May, Netflix reported that its ad-supported plan had nearly 5 million monthly active users worldwide after just six months.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
