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Starting January 29, customers with Amazon Prime Video will see a major shift: TV shows and movies will start to include ads. Amazon is changing that by rolling out these ads in big markets like the U.S., U.K., Germany, and Canada. Later, France, Italy, Spain, Mexico, and Australia will follow.
Subscription Changes and Fees
To avoid ads, users can choose to pay an additional $2.99 per month. This means that the current $14.99 per month Prime subscription fee will increase to $17.98 per month, while the standalone Prime Video subscription fee will increase from $8.99 per month to $11.98. Amazon assures that their ad-supported packages will have “significantly fewer ads than linear TV and other streaming TV providers.”
Financial impact and market analysis
- Revenue Forecast: Morgan Stanley predicts that Prime Video advertising revenue could reach a staggering $3.3 billion in 2024, and could climb to $7.1 billion by 2026. Moffett Nathanson, another analyst group, gives a lower forecast but also predicts significant growth.
- Market Impact: Analysts at MoffettNathanson predicted that Amazon’s move would disrupt the market, potentially taking share away from cable networks and ad-supported VOD players. They expect the change to be a “disruptive force” in advertising and streaming.
- Prime Video audience reach: Alexys Coronel, head of US entertainment and telecom at Amazon Advertising, highlighted that Prime Video has the potential to attract 115 million unique viewers in the US alone.
- Amazon’s expanding digital advertising market: Amazon reported advertising revenue of $12.06 billion in the third quarter of 2023, up 26% year-over-year, highlighting its growing dominance in the digital advertising space.
User reactions and predictions
Despite the introduction of ads, most Prime Video users are expected to continue using the ad-supported version. MoffettNathanson’s forecast assumes that about 15% of Prime Video users will choose to subscribe without ads. The company’s model also predicts that Prime members who choose to avoid ads will bring in $500 million in incremental revenue each year.
Comparison with competitors and future trends
Amazon isn’t the only company moving toward ad-supported streaming. Competitors like Netflix, Disney Plus, Max, Paramount Plus, Hulu, and Peacock have already implemented similar strategies. However, Amazon’s move into advertising makes a lot of sense due to its huge market share and broad audience reach. The US connected TV and ad-supported VOD market is expected to be worth around $16 billion by 2025, with Amazon and Disney expected to lead the way.
Amazon’s long-term content investment strategy
Amazon noted that it needs to keep pouring money into great shows and movies and plans to do so for the long term. This is part of a larger trend in the streaming world, where streaming services are relying on advertising revenue to expand their offerings.
Impact on Amazon Prime members
Consumer Choice
Amazon’s new ad strategy gives Prime members a choice: continue with the ad-supported version without paying more, or pay a little more for uninterrupted viewing. Consumers must decide if they are okay with ads or if they are willing to pay a little more each month.
Impact on viewing habits
The addition of ads could change how some Prime members watch. Amazon plans to feature shorter ads than regular TV to reduce annoying content. But whether that will keep viewers satisfied and engaged remains to be seen.
in conclusion
There are now ads on Amazon Prime Video, and that’s a big deal. It’s going to change the way we watch content and the way companies make money with their services. Amazon has a lot of users and a lot of money, so they’re likely to be a really big part of a world where streaming services are free but show ads. This is a whole new start for Prime Video. They’re trying to make sure viewers still have fun while making more money in this fast-changing digital entertainment landscape. About the brand new way Amazon Prime Video includes ads, Click here.
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