Amazon to introduce ads in Prime Video from January 24

Amazon's advertising business, which encompasses Amazon marketplace advertisements and Freevee, has emerged as a significant revenue source for the company.

Amazon has announced plans to incorporate advertisements into its Prime Video streaming service starting January 29, 2024. Prime Video subscribers, including those paying $139 annually for a Prime membership and those on the stand-alone $8.99 per month plan, will experience "limited" ad interruptions.

To avoid ads, subscribers have the option to pay an additional $2.99 per month for a commercial-free subscription. Amazon's move follows an industry-wide trend of adopting tiered subscription models. Competitors like Disney+, Netflix, Hulu, and Peacock have already introduced ad-supported options alongside higher-priced ad-free alternatives.

In a statement, Amazon highlighted the strategic shift as a means to continue investing in compelling content. The company aims to maintain fewer ads compared to traditional linear TV and other streaming providers. The introduction of an ad-free tier was initially announced in September, 2023.

The tiered subscription model is increasingly embraced by streaming services to bolster revenue. By tapping into both advertising dollars and encouraging subscribers to opt for higher-tier plans, companies can enhance sales. This move by Amazon aligns with the broader streaming wars, where significant investments are made in exclusive content.

The financials

Amazon's advertising business, which encompasses Amazon marketplace advertisements and Freevee, has emerged as a significant revenue source for the company. In the third quarter, the tech giant reported approximately $12 billion in advertising revenue, marking a 26% increase from the same period the previous year.

As streaming platforms navigate the evolving landscape of viewer preferences and revenue streams, Amazon's decision to introduce ads in Prime Video reflects the industry's ongoing experimentation with subscription models and advertising strategies. The success and reception of this change will likely influence the broader trajectory of streaming services in the coming years.