Amazon is in preliminary stages of discussions to introduce an ad-supported tier to its Prime Video service. This move will redefine its position in the streaming industry. This development comes as a significant shift in the company’s approach to its streaming platform as reported by Wall Street Journal.
Traditionally, Prime Video has been packaged as a part of its $14.99 per month Prime membership or can be availed as a standalone service priced at $8.99 per month alternatively. The existing format allows subscribers to supplement their content library with ad-free services such as Max, Paramount Plus, and Showtime via Prime Video Channels feature.
Amazon is exploring for options on how to incorporate advertisement into the user experience of its existing Prime Video members. The company is planning to provide an ad-free tier which will cost an additional fee to the current price of membership. One could opt not to pay the said increase, but the downside will be increased frequency of ads shown.
The specifics of the ad breaks are still being decided. However, it is unclear if Amazon’s proposed strategy will be competitive compared to Max’s three to four minutes of ad duration every hour. Amazon has not commented yet on these developments, as the price point for this new tier that will be supported by ads is not yet announced.
Amazon’s move to support ad in its Prime Video streaming service is a logical strategy, given the growing presence of its advertising arm in the industry. During the Amazon’s last earnings report, it has declared a healthy revenue of $9.5 billion generated from its advertising division. Amazon is also intensifying its efforts with Freevee, its free ad-supported streaming TV service, by integrating content from Prime Video. This move could prove instrumental in strengthening its financial standing amidst widespread layoffs and an uncertain economic climate, enabling the company to diversify its revenue streams and enhance its financial resilience​​.
More Ads Could Mean More Content
In a parallel development, Amazon is also reportedly engaged in discussions with Warner Bros. Discovery and Paramount to begin offering ad-supported versions of Max and Paramount Plus on its Prime Video Channels. This strategy can potentially increase the amount of content available to its streaming user base. Thus, increasing the value proposition to avail the service.
There are also speculations of Amazon considering bidding for the streaming rights of National Basketball Association (NBA) games, which are set to expire in 2025. Such a move could significantly bolster Amazon’s sports streaming portfolio, which already includes popular events like Thursday Night Football​.
In summary, Amazon can redefine its current position in the highly competitive world of streaming industry, by implementing this strategic shift to reshape its current offerings. All this can be achieved by introducing ads into its Prime Video’s current user experience. Leveraging on its existing technology in the ad sector and strong strategic partnerships, Amazon can increase its streaming service’s appeal to a broader audience by providing more content to consume for everybody.
This story originally appeared on Movieweb
