Amazon to Introduce Ads in Prime Video
Amazon has announced that it will begin airing ads in its Prime Video television shows and movies starting on January 29. This means that Prime Video subscribers, who pay $139 per year for a Prime membership, will experience "limited" ad interruptions. Even customers who pay for the stand-alone Prime Video subscription at $8.99 per month will also see ads from January 29 onwards.
However, Amazon has provided an option for subscribers to avoid the ads by paying an additional $2.99 per month for a commercial-free subscription.
The introduction of ads in Prime Video aligns with the industry-wide trend of implementing tiered subscription models. Other streaming platforms such as Disney+, Netflix, Hulu, and Peacock have already introduced ad-supported subscription options alongside their ad-free offerings.
Amazon stated in an email to customers, "This will allow us to continue investing in compelling content and keep increasing that investment over a long period of time. We aim to have meaningfully fewer ads than linear TV and other streaming TV providers."
Amazon had previously announced the ad-free tier in September, but has not yet responded to CBS MoneyWatch's request for comment.
Tiered Subscription Models Boost Revenue for Streaming Services
Streaming services are embracing tiered subscription models to boost revenue as they pour massive amounts of money into costly content amid the escalating streaming wars. The tiered model boosts sales by bringing in both ad dollars and incentivizing some subscribers to shell out more money for higher-tier subscriptions, according to the U.S. Chamber of Commerce.
Amazon's advertising business, which includes Amazon marketplace advertisements and Freevee, has served as a major revenue source for the company. In the third quarter, the tech giant raked in roughly $12 billion in revenue from advertising, up 26% from the same quarter last year, the company's financial statement shows.
