The news: Amazon Prime Video is considering launching an ad-supported tier, according to The Wall Street Journal, which would make it the latest major streamer to cave to the trend.
Ad-supported plans are gaining traction in streaming for their potential to enhance average revenues per user. Notably, even Netflix, once staunchly against ads, has adopted this model with apparent success.
Ad empire expansion: While retail media has long become an Amazon core competency, it’s quietly began to build its ad-supported streaming bona fides.
How it may work: One possibility is that Amazon would show more ads to existing Prime subscribers, alongside a promotion for an ad-free subscription tier. Another would involve possibly receiving a cut of revenues from other streamers’ ad-supported subscription tiers.
Our take: It may be some time before an ad-supported video-on-demand (AVOD) tier makes its way to Prime Video, but it’s clear that the company—and streaming industry as a whole—are determined to move in that direction.
However, Amazon may be an advertising giant, but its NFL missteps (more on those tomorrow) show it has a long way to go to build out a strategy and system to bring ads to its streaming service.
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