Your Prime Video show and movie sessions could make Amazon up to $6 billion in ad revenue
Prime Video’s upcoming ad-supported plan could earn Amazon up to $6 billion every year.
That’s according to UBS industry analyst Lloyd Walmsley Yahoo Finance (thanks to Cord cutters for the find) that Prime Video could potentially make even more money for its parent company if the upcoming ad layer proves to be a success
Amazon is joining many of the world’s top streaming services in introducing an ad-based subscription and, as we reported in late September, it will roll out its Prime Video with Ads subscription from early 2024. The ‘with ads’ tier will be the default subscription if you’re currently signed into Amazon Prime, and also for those signing up for the first time.
Per The Hollywood ReporterAmazon claims it will serve “significantly less” advertising than what is shown on traditional TV networks. However, if you don’t want to see ads while watching the best Prime Video shows and best Prime Video movies, you’ll have to pay an extra $2.99 per month (NB: we don’t yet know how much money UK and Australian viewers will have to pay for the non-ad tier).
The appeal of a cheaper, ad-based tier (though Prime Video doesn’t need one in our opinion), plus the potential windfall from those willing to pay the extra $2.99 to watch ad-free, means that Prime Video might be a bigger moneymaker. creator for Amazon. In fact, Walmsley estimated that Amazon could earn an additional $3 billion to $6 billion each year, depending on the number of minutes of ads it shows on Prime Video.
“We conservatively think it could add $3 billion (to Amazon’s revenue) if they showed just three minutes of ads every hour under the advertising community’s current go-to-market,” Walmsley said. “If they actually increased the number of ads closer to six minutes per hour, that could obviously double.”
For context, Netflix – perhaps Prime Video’s biggest streaming rival – currently has five million users signed up for its ad-supported subscription. This tier costs $6.99 / £4.99 / AU$6.99 per month, which generates around $35 million per month or $420 million per year for the streaming titan.
That figure seems small compared to the estimates going around for Prime Video’s ad-based tier. However, that number only takes into account people signed up for the ad-supported tier, and not any deals Netflix has made with ad-based companies that will likely pay a handsome fee to have their ads streamed on the service. In July, The Information claimed that Netflix’s ad business (ad subscribers and deals made with third-party ad companies) could earn as much as $5 billion a year – a figure more in line with proposed Prime Video numbers.
We’ll have to see if Prime Video can generate as much money with ads as industry experts think. In the meantime, you’ll want to make the most of the opportunity to watch new Prime Video movies and hit shows like Reacher, The rings of powerAnd Invincible, without ads interrupting your streaming sessions. Well, unless you’re in India, the only country where the ad-based tier of Prime Video has already launched.
Prime Video and Netflix aren’t the only platforms to bring ad-supported subscriptions into the streaming realm. In August, we reported that Disney Plus and Hulu prices would rise before the end of 2023, and that Disney (the streamers’ parent company) would introduce ad-based subscriptions for each. Meanwhile, HBO Max – Warner Bros Discovery’s streamer, which was rebranded as Max in May 2023 – launched a cheaper ad tier in June 2021. Other streamers, including Paramount Plus, have also joined the advertising plan in recent times.
Speaking of Prime-related matters, another Amazon Prime Day is just around the corner. See the latest deals ahead of the 48-hour event, which runs from October 10 to 11, in our Amazon Prime Day 2023 best early deals guide.