Commercials are coming to Amazon Prime Video next month

Madeline Berg
·2 min read
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  • Amazon Prime Video will introduce commercials to subscribers next month.

  • Subscribers to the service, included in Prime, can pay an additional $2.99 per month to avoid ads.

  • The new subscription tier is indicative of a shifting streaming landscape in which platforms are increasing prices.

Amazon Prime Video is introducing commercials to its content next month.

The streaming service, which is home to originals like "Reacher" and "The Boys," announced in September that it would begin rolling out ads on Prime in 2024, and subscribers have now received an email announcing that the change would begin on January 29 for US subscribers. Those who wish to avoid ads can pay an extra $2.99 per month.

"This will allow us to continue investing in compelling content and keep increasing that investment over a long period of time. We aim to have meaningfully fewer ads than linear TV and other streaming TV providers," Amazon wrote in its December 26 email to customers.

Prime Video can be accessed through Amazon Prime, which costs $14.99 per month, or on its own for $8.99 per month. The change will affect subscribers in the US, UK, Germany, and Canada first, and will launch in France, Italy, Spain, Mexico, and Australia at a later date.

The price hike comes as streaming services get more expensive across the board and introduce new revenue streams in efforts to turn a profit. Netflix, Hulu, Max, Disney+, Peacock, and Paramount+ With Showtime have all raised their prices this year.

The increases contrast the growth-at-all-costs strategy that the services had previously embraced.

"For a decade in streaming, an enormously valuable amount of quality content has been given away well below fair-market value, and I think that's in the process of being corrected," Gunnar Wiedenfels, Warner Bros. Discovery's CFO said in September.

Advertisements are one way that the streaming services are instituting this correction.

Last year, Netflix and Disney+ launched ad-supported tiers. While both ad-supported tiers generate higher revenue per average subscriber, the streamers have been met with a sluggish advertising market and forced to lower costs.

Amazon expects its new video ads to reach more than 115 million users each month, many of whom are in a young demographic, according to a leak pitch deck obtained by Business Insider. It also hopes to capitalize on synergies with Amazon shoppers by connecting ads directly to products on the e-commerce site.

Ahead of the launch of the ad-supported Prime Video, the company has ramped up hiring in its Amazon Ads division after a hiring freeze last year.

Will Gendron contributed to an earlier version of this story.

Read the original article on Business Insider