Amazon tipped to take on Netflix with an ad-supported Prime Video

Netflix with ads has proved popular: after a a slow start it cracked the million-subscriber mark in March 2023, and most of those subscribers were new sign-ups. Disney+ launched its own ad-supported tier last year, and it looks like Amazon plans to follow suit.

According to the Wall Street Journal, which quotes the usual "people familiar with the situation", Amazon is in early-stage discussions about launching its own ad-supported streaming service. If you're thinking "doesn't it already have one?" you're right, it does: Freevee, the former IMdB TV, which Amazon launched in late 2022. But this service would apparently retain the Amazon Prime Video branding.

Why is Amazon planning an ad-funded version of Prime Video?

It's all about the ads. Amazon is already the third-biggest player in digital advertising revenue in the US (Google and Meta are the first and second), and it wants more of that sweet, sweet advertising cash. The WSJ says that "advertisers say they are eager to have Amazon offer an ad tier for Prime Video service... specifically, ad buyers say they want more access to premium movies and programs that have remained largely ad free, content that often garners more buzz."

Although most of Prime Video is ad-free, not all of it is. Amazon puts product placement in some shows, and its sports coverage has advertising. A lower cost Prime subscription with more ads would enable Amazon to sell more ad space without infuriating its existing subscribers.

According to the WSJ nothing is carved in stone yet, but Amazon is exploring options including adding ads to every Prime subscription and then charging more for an ad-free experience. I hope that's not the one they go with, even if the ad breaks are indeed "short" as the WSJ reports. 

The plans are part of what seems to be a shift in strategy. Under Jeff Bezos, Prime Video was all about getting eyeballs no matter the cost: Bezos wanted Amazon to have its own Game of Thrones and was happy to throw billions of dollars at content creators. Under new boss Andy Jassy, however, Amazon is reportedly more focused on profitability than prestige.