Following the suit of Disney+ and Netflix, Amazon is ending its ‘ads-free’ version of Prime Video for subscribers from February 5, 2024. Viewers in the UK will have to fork out an additional £2.99 per month to continue ad-free streaming on the popular platform.
Recently, Disney+ and Netflix have rolled out ad-supported memberships that come at lower prices. Amazon decided to come up with such a payment structure, focussing primarily on advertisement revenue.
Amazon’s emails to its subscribers stated that this would “allow us to continue investing in compelling content and keep increasing that investment over a long period of time”.
This decision from Amazon reflects the changing structure of the streaming industry where content is of paramount importance, and the demand for high-quality content is intensifying.
We aim to have meaningfully fewer ads than linear TV and other streaming TV providers.Amazon
Thus, Amazon aims to strategically balance user experience and revenue generation.
Prime Video Users in the US and Canada will See Ads from January
Interestingly, Amazon has announced this change in the US and Canada too, where users need to pay more from January 29, 2024. The streaming platform has further plans to expand this advertisement model in countries like Australia, Mexico, Spain, France, and Italy by 2024.
However, the rates of ads-free subscriptions will vary across demographics.
Subscribers in the UK feel that they will be paying a higher premium compared to their American (£2.35) and German (£2.60) counterparts.
Besides offering streaming services, Amazon Prime subscribers enjoy several benefits like same-day delivery. It was back in 2022 that the platform hiked the subscription rates. The introduction of advertisements in Amazon Prime Video is a part of the company’s broader strategy to strengthen its quality of content.
The company has been proactive in streaming high-profile content, including popular series like “The Boys”, “Leverage: Redemption”, and the adaptation of Warhammer 40,000 that features Henry Cavill.
Ad-Free Content Was The Key To Popularity Of Amazon Prime Video
The ‘ad-free’ privilege of subscribers used to be the USP for Amazon when it started streaming popular programs on Prime Video after rolling out the platform. This marked a stark contrast between OTTs and traditional TV through cable.
In the third quarter of 2023, Amazon earned a revenue of $12 billion through its advertisement services.
However, with global costs of operation rising, streaming companies have been left with no other option than to explore fresh streams of revenue. Advertisement presents them with a viable solution, as evident through similar strategies adopted by Netflix and Disney.
In July 2023, Andy Jassy, the CEO of Amazon visited Amazon Studios. Subsequently, the announcements indicated that the company would re-evaluate the role of Prime Video in the portfolio of the company.
Prime Video is available as a part of a broader Prime package. Over the years, this OTT platform has been a significant player in the streaming market. However, it has yet to present any “zeitgeist-defining” program like its competitors.
The annual content budget of Prime Video of Amazon is around $7 billion. The rights for “The Lord of the Rings” constitute a staggering $200 million in this budget. This explains why Amazon is feeling the pressure to monetize Prime Video.
The introduction of the ads-free version of Prime Video is based on the company’s understanding of the advertising market.
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