Amazon (AMZN) recently announced its decision to incorporate advertisements into shows and movies on its Prime Video platform. This move, slated to commence in early 2023 for U.S. viewers, aims to enhance revenue streams from entertainment and offset production costs. However, viewers who prefer an ad-free experience can avail it by paying an additional $2.99 a month. This approach aligns Amazon with other streaming giants like Netflix (NFLX) and Disney (DIS), which have already incorporated ad-supported options to their services.
Currently, Amazon's Prime membership, priced at $14.99 a month or $139 a year, includes access to Prime Video. For those who prefer to subscribe only to Prime Video, the monthly cost stands at $8.99. In a recent disclosure, Amazon revealed its global Prime member count to be over 200 million. The ad-supported viewing option, while being introduced initially in select countries like the U.S., U.K., Germany, and Canada, will be rolled out to other regions like France, Italy, and Australia later in 2024.
Amazon's robust content portfolio, including hits like "The Marvelous Mrs. Maisel" and the highly budgeted "The Lord of the Rings: The Rings of Power", positions it uniquely in the streaming space. The company's intention to develop an ad-supported Prime Video tier was highlighted earlier by The Wall Street Journal, in line with Amazon's growing emphasis on its advertising business, bolstered by its dominant search ad segment and precise user targeting based on purchase and browsing data.
The new ad-integration has garnered positive feedback from the advertising community, with industry players like Kelly Metz from OMG applauding the move as it promises a wider reach, comparable to mainstream broadcast networks. Furthermore, Amazon's increasing foray into digital advertising is evident as its projected to hold nearly 14% of U.S. digital ad spending by 2024, per Insider Intelligence data. It's worth noting that Amazon has been gradually integrating advertisements into its content, with events such as Thursday Night Football already featuring ads and select shows benefiting from product-placement advertising.
