With the introduction of advertisements on its video service, which has over 100 million subscribers, Amazon’s Prime Video has created a significant stir in the streaming market. According to MoffetNathanson Research, Prime Video is expected to generate an estimated $1 billion in revenue during its first operational year and is poised to make a major entry into the ad-supported streaming market with its upcoming service launch on January 29. Analysts view Amazon’s move as a “disruptive force,” even though its active viewership in the United States may be lower than that of some rival services. Furthermore, estimates suggest that in 2025, $1.75 billion, $2.26 billion, and $2.76 billion will be this amount.
Lesser ad content than other streaming platforms
Amazon stated that Prime Video would feature “meaningfully fewer ads than linear TV and other streaming TV providers” when announcing its plans. The Wall Street Journal reported that Prime Video would have an average ad load of two to three and a half minutes, which is expected to be significantly less than traditional TV and most streaming services. The report was based on Amazon’s presentation. Certain advertisements will start playing before the content does, and some will run while the show is being aired. More than 200 million people have signed up for Amazon Prime worldwide. This entitles users to free two-day shipping from the behemoth online retailer as well as other perks like access to Amazon Music.
Naturally, Amazon is adopting a different strategy than other streaming services like Netflix and Disney+. These services introduced more affordable options for plans that have ads in addition to their more expensive ad-free tiers. While this is going on, Amazon is automatically displaying advertisements on Prime Video for all subscribers. Users in the United States will need to actively choose to pay an extra $2.99 per month to avoid advertisements. This will result in an additional $400 million. By the end of 2024, the U.S. will have benefited from a total of $1.4 billion from these actions. In its first year of operation, Amazon is expected to earn $300 million from advertising. Moreover, it is expected to earn an additional $100 million from subscribers abroad.
Other ad-supported services
The company estimates that there are 96 million Prime households in the United States. However, only some of them are actively watching Prime Video. Beyond the ad-supported service, it is estimated that in 2025, Amazon will earn $1.7 billion from FreeVee. It is a Free Advertising Supported Television (FAST) channel similar to Tubi and Pluto TV. It is anticipated that the addition of “Thursday Night Football” will boost Amazon’s digital video and streaming businesses by an additional $600 million. When all of these projects are combined, it is anticipated that Amazon’s yearly revenue from streaming and digital video platforms will reach $4 billion. This will exceed that of rivals like Roku ($1.9 billion), Peacock ($2.3 billion), and Hulu ($ $3 billion).
Other options will be made available
Similar commercial-free options will be available in other markets. Early in 2024, ads will be made available to users in the United States, the United Kingdom, Germany, and Canada. Later in the year, France, Italy, Spain, Mexico, and Australia will host the first-ever Prime Video advertisements. According to Amazon, users who pay for a commercial-free experience will still see advertisements where Prime Video already does so. This includes sports content like Thursday Night Football and material from the FAST service FreeVee.