- Amazon is in early discussions to launch an ad-supported tier of its Prime Video streaming service, people acquainted with the situation told The Wall Street Journal.
- The tech giant could determine not to maneuver forward with the ad service, but when it does, ads could take quite a lot of forms, including bringing more promoting to existing Prime subscribers but providing an choice to pay more for an ad-free service. Ad breaks can be short, per the report.
- The possible introduction of an ad-supported tier on Prime Video follows similar moves by competing streaming services and comes as Amazon is looking for additional revenue amid wider cost-cutting and layoffs.
Amazon reportedly mulling an ad-supported tier of Prime Video could possibly be a logical next step because the firm looks to generate more revenue from promoting. The move would also align with how the broader streaming landscape has shifted. Formerly ad-free streamers including Netflix and Disney+ have recently introduced ad-supported tiers as subscriber growth has slowed, making Prime Video one in every of the last mostly ad-free holdouts within the space.
The addition of promoting to Prime Video, which already features product placement and service-focused pre-roll ads, would help Amazon because it continues to shore up its promoting capabilities and market share. The company’s ad revenue grew 23% year-over-year in the primary quarter of 2023 for a complete of $9.5 billion. The addition could also help cover the price of Amazon’s content expenses: The company spent $16.6 billion on content in 2022, with roughly $7 billion spent on Amazon originals, live sports and licensed third-party video content included with Prime, CFO Brian Olsavsky said on a previous earnings call.
Amazon isn’t ranging from scratch with ad-supported video: The company already operates Freevee, formerly referred to as IMDb TV, and has worked to spice up the platform with Amazon Original content and recent ad formats, like an interactive pause ad format that it revealed on the NewFronts. Bringing ads into Prime Video would construct on those previous moves, Insider Intelligence principal analyst Ross Benes explained in emailed comments.
“The Fire TV interface makes virtually no distinction between shows on ad-free Prime Video and people on ad-supported Freevee. Much of Amazon’s library has also been moved over to Freevee,” Benes said. “In recent years, Prime Video has gotten more aggressive about running promos prior to its shows and including ad-filled sports broadcasts. Given these developments, putting midroll and pre-roll in Prime Video programs isn’t that big of a step.”
Expanding promoting on Prime Video could also play into among the firm’s biggest streaming bets. “Thursday Night Football” broadcasts have included ads that performed well, in line with TV outcomes company EDO. Ads aired in the course of the platform’s inaugural season carrying this system were 116% more practical than the primetime average, per EDO data shared with Marketing Dive. For comparison’s sake, an advertiser would want to air about 39 spots across primetime TV to generate as much engagement as one ad aired during “Thursday Night Football” last season, in line with the corporate.
“[‘Thursday Night Football’] on Prime Video demonstrated that Amazon can deliver on excellent premium programming and great outcomes for advertisers,” said Kevin Krim, president and CEO of EDO, in emailed comments. “And they are going to know from that have that brands promoting on Prime Video will expect a sturdy measurement framework that goes beyond traditional metrics like reach and frequency.”
“Ad-supported streamers are all learning it’s crucial for advertisers to generate probably the most value from their campaigns. The ones which might be most successful are focused on driving large, engaged audiences that drive actions connected to business results for their advertisers,” Krim added.
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