What Amazon’s Pivot to Prime Video Ads Will Look Like

Rick Porter
·3 min read
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Amazon is joining the SVOD-but-with-ads game. The tech giant will begin incorporating ads into series and movies on its Prime Video streaming service early next year in the United States, Canada, United Kingdom and Germany. Several other countries will see the ad rollout later in 2024.

With the move, Prime Video will join the likes of Netflix, Disney+ and Max in bringing commercials into their formerly ad-free streaming environments. Unlike those streamers, however, Prime Video won’t be offering its ad-supported tier for a lower price: The ad option will be the default for Amazon Prime subscribers, and those who want to watch movies and shows without commercials will have to pay a little extra each month.

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Prime Video users will just start seeing ads on programming next year?

Yes. Like its streaming cohorts, Amazon is coming around to the idea that a second revenue stream from selling ads will be helpful for Prime Video in addition to whatever portion of a Prime membership goes to paying for streaming.

Why now (or, more accurately, in a few months)?

Amazon says it will use the extra revenue from selling commercial time (and the extra fee for watching ad-free) to “continue investing in compelling content and keep increasing that investment over a long period of time.” Prime Video is home to some very pricey programming, including the half-billion-dollar Lord of the Rings: The Rings of Power, nine-figure spy series Citadel and Thursday Night Football, which Amazon is paying the NFL about $1 billion a year to carry. TNF, incidentally, already has a commercial load similar to NFL telecasts on linear networks.

How many ads will people have to sit through?

Amazon says it’s aiming to show “meaningfully fewer ads than linear TV and other streaming TV providers” on Prime Video programming. Getting below the linear TV threshold of about 18 minutes of advertising per hour is something other SVOD providers already do on their ad-supported tiers. Amazon’s free, ad-supported streamer, Freevee, typically features three to six minutes of advertising per episode on its original series.

Oh yeah, Freevee. Is anything happening there with this announcement?

Nope. Freevee service won’t be affected by the switch to ads at Prime Video, Amazon says.

How much is this going to cost?

For existing Prime subscribers, nothing more. Amazon says it won’t raise the price of a Prime membership — currently $139 for an annual payment, or $14.99 in monthly installments — in 2024. However, anyone who wants to watch movies or TV shows without ads will have to pay an extra $2.99 a month, or a little under $36 per year. (Live sports will have ads regardless of which tier users join.)

Will movies have ads, too?

Yes, a “limited” number of them, the same as with TV series. It’s unclear at the moment whether ads will pop up during the run of a film or in an unskippable block beforehand, as is the case at some other streamers.

Back to the price: Don’t most streaming services offer their ad-supported tiers at a discount? Why isn’t there a cheaper option here?

It’s true that the ad-supported tiers on Disney+, Max and Netflix — as well as platforms like Hulu, Peacock and Paramount+, which have always incorporated advertising into their business — cost less than the ad-free ones (usually about $6 to $8 less per month). That’s less of an option for Amazon, however, since Prime Video is part of a bundle of services, ranging from free shipping on packages to music streaming, that come with an Amazon Prime membership.

Haven’t we been here before?

Definitely — and not just with streamers putting ads on their programming. Streaming platforms are learning (or relearning, in the case of those owned by legacy media companies) what cable networks have known for years: Subscription fees are nice, and advertising is nice, but having both revenue streams at the same time works even better for the bottom line.

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