Amazon is reportedly planning to launch ads on its Prime Video streaming service. The measure, which would mean the introduction of short commercial breaks, has been discussed for weeks Wall Street Journal reported
Amazon has not officially confirmed the news, but industry insiders have said Prime subscribers would have the option to pay more for ad-free shows and movies if the plans go ahead.
Why we care: Both Netflix and Disney launched ad tiers on their streaming services last year. Netflix’s ad level almost has it 5 million monthly active users. Meanwhile, Disney expects up to 70% of subscribers to switch to its level of ad support.
If Amazon follows in the footsteps of its rivals, it would create huge opportunities for digital sellers to team up with it third fastest growing advertising business in the US, having done $9.5 billion in the first quarter of 2023 (a year-on-year increase of 21%). The company currently sells most of its ads to retailers looking to promote products in Amazon’s search results. But more doors could be opened for premium advertising if plans go ahead.
Why the change? A growing number of streaming giants have introduced ad-supported tiers to boost revenue and grow subscribers, including HBO’s Max and NBCUniversal’s Peacock.
Amazon has been exploring new ways to boost revenue after the company made tens of thousands of layoffs that hit its ad division in April. It was the largest number of layoffs in the company’s 29-year history following a hiring surge during the COVID pandemic.
The company is now shifting its focus to investing in new original shows, concerts and live sports, where premium advertising can be sold.
What did Amazon say? Amazon has reportedly been in discussions about Prime Video ad levels with Warner Bros, Discovery and Paramount Global. However, as the talks are believed to be in the early stages, representatives of the three brands have so far declined to comment.
However, in April, Amazon CEO Andy Jassy hinted at it great potential he sees in the ads, despite the recent layoffs. He said: “Even in tough economies, most people are still shopping and with the biggest e-commerce shopping site, we have a lot of customers that businesses want to reach.”
How will things change for advertisers? In addition to creating more advertising opportunities on Prime Video, Amazon has confirmed that it is working to give digital marketers the tools to create AI images and videos in ad campaigns. This could significantly help increase listings and sales. However, a schedule has not yet been confirmed.
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