In a major shift for its streaming service, Amazon Prime Video has announced that it will introduce advertisements to its entertainment content starting from 29 January. This move once frowned upon by streaming platforms, is becoming increasingly commonplace as companies seek dual revenue streams from both subscriptions and advertisements.
The change will first take effect in the US, with the UK, Germany, and Canada following suit on 5 February. Other countries, including France, Italy, Spain, Mexico, and Australia, will see the change later in the year. Customers in these regions have already begun receiving notifications about the upcoming modifications.
The introduction of what Amazon describes as “limited advertisements” is a strategic move designed to finance content creation over a prolonged period. As the company stated in a letter to subscribers, “This will allow us to continue investing in compelling content and keep increasing that investment over a long period of time.”
However, there are some exemptions to the new policy. Content that is purchased or rented will remain ad-free. Furthermore, customers in Guam, the US Virgin Islands, and the Mariana Islands will not see ads rolled out.
The decision by Amazon Prime Video to include ads in its content portfolio follows similar moves by Netflix and Disney+, both of which have introduced ad tiers. Currently, Apple TV+ remains the only major streaming platform to employ a pure subscription model without any advertisements.
This change is part of a broader strategy by Amazon to increase its advertising revenue. Over the past few years, Amazon has been mounting a significant ad offensive through live sports and ad-supported sibling Prime Video platforms such as Freevee and Twitch. Although the $38 billion that Amazon made from advertising last year represents a small share of its $502 billion in total annual revenue, this segment is growing at a rate of over 20% per quarter.
In addition to the introduction of ads, Amazon is also offering an ad-free option for an additional $2.99 per month. Prime Video customers can pre-register for the monthly ad-free option, with billing commencing on 29 January.
As streaming platforms continue to evolve and adapt to market demands and economic realities, the introduction of ads on Amazon Prime Video marks a significant shift in the industry’s business model. While some customers may see this as a downside, it underscores the ongoing efforts by companies to balance customer satisfaction with the need to fund high-quality content.