Amazon Plans to Launch an Ad-Supported Tier for Prime Video

Prime Video is reportedly joining Netflix, Hulu, Max, and Peacock in offering ad-supported tier for its platform. According to reports, Amazon has been discussing it for the past several weeks in an effort to generate more revenue from its entertainment division.

Amazon Prime Video Launching Ad-Supported Tier?

Amazon is reportedly planning to launch an ad-supported tier for its streaming services Prime Video. According to Engadget, the discussions are in the early stages that have been going on for the past few weeks.

If this pushes through, Prime Video will join Hulu, Max, Peacock, and Netflix, which have recently added similar ad-supported subscription plans to their platform.

In the past, Amazon has already made efforts to bring more ad-supported programming to the platform as the company also relies on advertisements. Several shows on Prime Video, especially its sports programming, already come with advertising.

The company now plans to have alternative ways of showing ads to its subscribers and for these commercial breaks to be much shorter. Prime Video is currently $8.99 monthly on its own or as part of an Amazon Prime membership.

However, it was still unclear what the price range may look like for its ad-supported plan. In comparison, Netflix's Standard plan will cost subscribers $9.99 monthly, while its ad-supported plan, also without offline downloading, is $6.99. Amazon could follow this or offer a much cheaper option.

Amazon Prime Video Increasing Revenue Through Ads

The Verge reported that adding an ad-supported tier to the Prime Video platform would make sense as Amazon has already entered the advertising industry, which rose to $9.5 billion in revenue, based on its latest earnings report.

Amazon is also reportedly doubling down on Freevee by adding content from Prime Video, such as "The Summer I Turned Pretty" and "A League of Their Own." Freevee is Amazon's free ad-supported streaming TV service.

As Amazon struggles with economic uncertainty, which led to laying off employees, an ad-supported tier will help increase its revenue that could also cover the costs of making shows and movies, with its CEO Andy Jassy focusing on the company's profitability.

According to Amazon's Chief Financial Officer, Brian Olsavsky, the company has already spent about $7 billion in 2022 to fund Amazon Originals, live sports programming, and licenses third-party video content, which includes Prime Video.

Compared with the company's previous administration, Amazon founder and former CEO Jeff Bezos focused more on growing the video entertainment service than simply making it more profitable, as he sees the value of entertainment and live sports.

Wall Street Journal reported that Amazon is also having discussions with Warner Bros., Discovery, and Paramount Global about adding the ad-based tiers of their streaming services through Prime Video Channels.

Additionally, they could also make a bid to acquire the National Basketball Association (NBA) streaming rights once it expires in 2025 to bolster its sports streaming lineup, along with its Thursday Night Football.