Amazon Prime Video will get more advertising next year

Despite forcing all Prime Video subscribers to an ad-supported tier in January unless they pay an additional $3 a month, Amazon clearly hasn’t yet exploited Prime Video’s full advertising potential. Amazon’s advertising business continues to rely primarily on ads that appear on Amazon’s website, Amazon Chief Financial Officer Brian Olsavsky told investors in August. In the first full quarter that its ad-supported Prime Video service was available, Amazon’s ad business grew slower than expected than in previous quarters, and ad sales missed analyst estimates ($12.77 billion vs. $13 billion).

That said, advertising remains one of Amazon’s fastest-growing and highest-margin businesses, and the conglomerate is keen to expand it. Amazon has reportedly already exceeded its 2025 ad spend target for Prime Video.

Amazon has also been competitive on ad pricing, reportedly offering lower prices than Netflix while giving itself an early advantage by forcing all of its subscribers into ad tiers and already appealing to advertisers with its e-commerce business.

Good line

With Amazon’s advertising business growing and the company having had minimal negative impact since launching ad-supported Prime Video, it decided to go further and see how much more subscribers were willing to endure.

On the one hand, those who have already watched ads on Prime Video may be open to accepting whatever Amazon’s advertising department is willing to throw at them.

Others, however, may think that they have already paid their dues with the current advertising setup. For subscribers who are fed up with streaming tactics like rising prices, library changes, and password cracking, there’s a fine line between acceptable and disruptive advertising. Ad fatigue can also make your ads less effective.

At least for now, ad levels make business sense for streaming providers, most of which are struggling to achieve or maintain profitability. Ad subscriptions represent 38 percent of the streaming market and accounted for more than half of new subscriptions in Q4 2023 and Q1 2024 on a per-air basis.

As long as people continue to pay for ad subscriptions, streaming providers will continue to look for new ways to leverage viewers to generate ad revenue. As Amazon increases advertising next year, we can expect more streaming services to see how much advertising customers will accept.