Amazon Prime Video has joined the growing pool of streaming services that are integrating ad tiers into their subscription models. The streamer announced in September that it would be adding advertisements to its TV shows and movies, as well as offering a new ad-free option for a higher monthly subscription fee.
Amazon’s announcement comes as more streaming services move towards the ad tier strategy. Last year, Netflix introduced an ad-supported tier to its subscription offerings. This decision was made as the company faced subscriber losses in 2022. In addition to its standard and premium options, it added a “Standard with ads” option for $6.99 a month, hoping the lower price would bring in new subscribers. Prices for the standard plan have also risen to $15.49 per month to urge more subscribers to go with the ad-supported option. Disney+ soon followed suit by also offering ad-supported options in select markets. Meanwhile, Warner Bros. Discovery recently rolled out a new streaming service, Max, which also provides ad-free and ad-supported tiers.
Ad tiers are attractive to corporations for several reasons. Sometimes, they can be used to generate new subscribers by offering a cheaper ad-free option, but they can also be used to hike up standard ad-free plan prices. Streamers like Netflix are also confident that they can start generating significant ad revenue from these ad-supported options. As a result, one more streamer is jumping on the ad tier train.
What to know about Amazon Prime Video’s ad tier
Amazon announced on September 22 that it would be incorporating an ad tier into its streaming service beginning in 2024. The streamer explained that this move was necessary given the expansion it has experienced. Amazon Prime Video has been gaining momentum with hits like The Marvelous Ms. Maisel, The Boys, and Gen V, and investing significantly in shows like The Lord of the Rings: The Rings of Power. To keep up with that expansion, it is going to start including “limited advertisements.”
Amazon explained that there would still be fewer ads than one would experience on cable or other streaming providers. The ads will come to the United States, United Kingdom, Germany, and Canada in early 2024, while France, Italy, Spain, Mexico, and Australia will receive them in late 2024. Previously, Amazon Prime Video has always offered just one ad-free option for subscribers. Currently, a Prime Video membership is $8.99 a month by itself or is included in Amazon Prime membership for $14.99 per month. These membership rates aren’t going to change for current subscribers. However, every subscriber will now experience ads unless they upgrade to a new ad-free subscription for an additional $2.99 a month.
A date for the ad rollout hasn’t been confirmed, but Amazon promised to notify users once the change is weeks away. As streamers continue seeking cost-cutting measures through ad tiers, show cancelations, and reduced episode counts, it’s expected the number of wholly ad-free platforms will continue to shrink. From a business perspective, it’s a pretty profitable strategy, as it encourages new subscribers, forces current subscribers to pay increased prices, and provides ad revenue opportunities. Of course, being wholly ad-free helped differentiate streaming from cable and made it more attractive to customers. There’s always the possibility that implementing ads or asking for more money from subscribers will turn some customers away, too.
While new ad tiers may frustrate some subscribers, it can’t be denied that it could be lucrative for streamers. The only problem is that all the studios behind these streamers already generate billions in revenue yet have failed to compensate their actors and writers adequately. If they keep demanding more and more money from clients yet continue to fail to pay their workers, it could make these ad-tier initiatives a lot more ill-received.
(featured image: Giuliano Benzin / Getty)
