Amazon may be further leveraging its enviable position with Madison Avenue by launching an ad-supported Prime Video tier. The move makes sense given Amazon’s surging ad revenue from online sales. The company also owns the FAST service Freevee. Amazon’s ad savvy runs deep, and reports suggest the e-commerce giant is also in discussions with Warner Bros. Discovery and Paramount Global to package the ad-supported versions of Max and Paramount+ under the Prime Video Channels banner. The news comes on the eve of the Cannes Lions International Festival of Creativity for the global marketing elite.

“An ad-supported tier will help the company bolster its ad business at a time when more dollars are shifting from linear television to streaming,” reports Axios. “It could also help lure more subscribers to its video service.”

Details on the timing and configuration for an ad-supported Prime are unclear, and The Wall Street Journal writes that Amazon could ditch the plan, which is reported to be “in the early stages,” having been initiated “over the past several weeks.”

But it makes sense for Amazon, which in a tough market saw revenue from ad products surge 21 percent in Q1, totaling $9.5 billion. Already, Amazon “is the third-biggest player in terms of digital ad revenue in the U.S. after Google and Meta,” writes WSJ. But the company has eliminated 27,000 positions since November and is looking for ways to improve income.

A Prime tier with commercials could provide advertisers with desirable inventory that has remained largely ad free. In addition to the platform’s original hits, Amazon will show “Thursday Night Football” games beginning this fall.

WSJ reports Amazon “is discussing bidding for the rights to stream National Basketball Association games, whose rights come up for renewal in 2025.” A new ad-supported tier could help pay for that, as well as further monetize the company’s existing content investments, including output from Amazon Studios and MGM Studios.

Prime Video is available at no charge to customers who pay $14.99 per month for membership in Amazon Prime. It is also sold as a standalone service for $8.99 a month.

Possible approaches to adding an ad tier include serving “more advertising to existing Prime subscribers and [giving] them an option to pay more for an ad-free alternative and other features,” WSJ suggests.

Amazon “is planning for the ad breaks to be short,” a format recently floated on Amazon Music, giving Prime members more songs at no additional cost, but making most songs unavailable to stream on demand without a subscription upgrade.

The past year saw ad-supported tiers rolled out by Netflix, Disney and Warner Bros. Discovery’s Max, to name a few. According to Axios, “Netflix recently touted early success of its ad-tier, revealing that it drew nearly 5 million monthly active users to its service within the first 200 days of launch.”

Related:
Amazon Plans Ad-Supported Streaming Tier Amid Race for Profitability, Yahoo! Finance, 6/7/23
Amazon Prime Reportedly Weighing Ad-Supported Streaming Tier, Forbes, 6/7/23
Amazon Explores Ad-Supported Tier for Prime Video Streaming Service, Los Angeles Times, 6/7/23