Amazon Prime Video Introduces Limited Ads, Offers Ad-Free Option at a Premium
Amazon Prime Video has undergone a notable change for its members, as starting today, viewers may observe the inclusion of “limited” advertisements in shows and movies. To access an ad-free experience, Prime members will have the option to pay an additional $2.99 per month, a move announced by Amazon in September.
The introduction of ads on Prime Video aligns with a broader trend in the streaming industry, where services are increasingly incorporating ads and adjusting pricing models to generate revenue. Streaming platforms, once primarily focused on acquiring subscribers, are now under pressure from investors to turn profitable, even if it means losing some subscriptions.
Amazon, in an email to Prime members in December, stated, “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.”
The shift in strategy is not unique to Amazon, as other streaming services have adopted similar measures. In October, Netflix increased the cost of its premium ad-free plan in the United States by $3 per month to $22.99. Disney+, owned by Disney, raised its ad-free plan to $13.99 in October, marking its second price increase in less than a year. Hulu, also under Disney’s majority ownership, increased its ad-free subscription by $3 to $17.99.
Competitors such as HBO Max and Peacock have also adjusted their pricing models, with the former implementing its first-ever price hike in January 2023.
The push for additional revenue comes as the growth in consumer demand for streaming services has slowed since the pandemic. Simultaneously, the production costs for creating original content have risen, further challenging the financial sustainability of streaming platforms.
Amazon, emphasizing the need to support content production, particularly major programs like “Thursday Night Football,” disclosed that its spending on content reached $16.6 billion in 2022, representing a nearly 30% increase.
A recent Morgan Stanley report anticipates that ads on Prime Video will contribute over $3 billion in additional revenue in the current year, with projections soaring to $7 billion by 2026. Despite the introduction of limited ads, Prime Video remains part of the comprehensive $139 yearly Prime subscription, which includes a diverse range of content such as the new series “Expats” and “Citadel.”
