Amazon is creating an ad-supported version of its Prime Video streaming service that doesn’t require a subscription, according to Ad Age.
The move marks a shift for Amazon, which has historically shied away from running ads on its Prime Video content.
Amazon is in talks with studios about providing content for the new ad-supported video service, and it may share ad revenue and audience information with media partners who create for it.
Prime Video currently gives consumers access to ad-free movies and TV shows, and is included in an Amazon Prime subscription at $ 99 a year. Consumers can also sign-up for Prime Video without having to become an Amazon Prime subscriber at $ 8.99 per month.
An ad-supported Prime Video service could strengthen Amazon by:
- Driving Prime subscriptions. Certain consumers may begin to watch and become hooked on Amazon programming. In turn, some of these consumers may opt for ad-free viewing experiences and sign up for Prime memberships. Amazon’s US Prime subscriber base is currently estimated to stand at 85 million, according to Consumer Intelligence Research Partners. Prime subscribers spend nearly two times as much on Amazon as nonmembers. In addition to the direct benefits to Amazon’s revenue, these purchases also provide data that Amazon can use to strengthen its ad targeting capabilities.
- Increasing Amazon’s appeal to advertisers. Amazon accounted for half of all e-commerce growth in 2016. Its dominance in e-commerce makes it an attractive place for advertisers. Consumers are in the mindset of purchasing something when they visit the platform, and brands that advertise on the platform will be able to take advantage of this. Additionally, Prime members tend to have high incomes, giving brands another reason to want to advertise on Amazon. Amazon reached 33% of OTT households in December 2016, setting it up to capitalize on the shift in viewership from TV to digital video.
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