Amazon will bring ‘limited’ ads to Prime Video starting in early 2024

Dive Brief:

• Amazon is bringing ads to TV shows and movies on Prime Video, according to a company blog post. The streaming service is included as a perk attached to the company’s larger Prime membership program. 
• Commercials will start appearing on Prime Video content in early 2024, with the U.S., U.K., Germany and Canada as the initial test markets. Amazon said that there will be “meaningfully fewer ads” than what consumers see on linear TV and other streamers.
• Prime subscribers will be notified ahead of the rollout and don’t need to make any changes to their membership plans. Those in the U.S. can spend $2.99 more per month to retain an ad-free version of Prime Video, while Amazon will share pricing options for the premium tier in other markets at a later date.

Dive Insight:

Amazon joins a raft of companies that are trying to make their bets on streaming video entertainment more profitable with the implementation of ads for Prime Video. While the service already runs commercials around some marquee programming, including the NFL’s “Thursday Night Football,” this represents a significant ramp-up in its monetization efforts. 

The move, previously reported on by The Wall Street Journal in June, could appeal to brands that have long desired to connect with consumers through streamers that, until recently, have mostly been commercial-free. Viewers also have the option of avoiding ads on Prime Video by paying extra per month, though live sports programming will still carry commercials.  

In the announcement, Amazon harped on the value that Prime delivers, with Prime Video just one offering in a package that also includes benefits like free delivery. The firm also touted the variety and quality of the streamer’s content library, calling out the success of original series like “The Marvelous Mrs. Maisel,” which closed out a five-season run as the most Emmy-nominated streaming comedy ever, as well as its ownership of the MGM studio. Another linchpin for Prime Video has been a deal to stream “Thursday Night Football,” another sign that primetime viewing occasions are making the jump to the digital realm from the confines of linear TV. 

Gauging the popularity of Prime Video is difficult since, like other streamers, Amazon is not beholden to conventional ratings measures. The platform has been known for costly endeavors, including the mega-budgeted “Citadel” and a series set in “The Lord of the Rings” universe that is considered one of the most expensive TV shows of all time. Introducing commercials to this environment could help offset some of the steep price tags that come attached to Hollywood productions that streamers need to churn out at a steady pace to win and retain viewers.

The shift might also further accelerate momentum for Amazon’s advertising segment, which is mostly focused on its e-commerce business. Amazon’s ad sales were up 22% year-over-year in the second quarter to $10.7 billion, a rate of growth well above digital rivals. 

Amazon is entering an increasingly competitive market. Rivals Netflix, Disney+ and Max have also pushed further into the ad-supported arena and fought hard to win dollars over from traditional TV. The category at large is also contending with dual Hollywood writers and actors strikes that have waylaid production for months. Many issues raised by the unions stem from the streaming model and its impact on areas like residuals. 

Prime Video implementing ads additionally raises questions about the future of Amazon’s other streaming service, Freevee, which is already ad-supported and has been a point of focus in the company’s overtures to Madison Avenue at events like the NewFronts.