Prime’s time
Amazon Prime Video has joined the growing slew of streamers with ad-supported offerings, announcing plans to roll out the new tier in the US in early 2024. The service will set users back an extra $2.99 a month if they want to carry on enjoying The Marvelous Mrs. Maisel or The Boys ad-free.
It all ads up
Amazon has said that the limited ads will allow the company to continue its content spending, which soared 28% to $16.6 billionin 2022, after splashing out on mega shows like The Rings of Power. While commercial breaks might be new to Prime Video, advertising has been a burgeoning segment in Bezos’s behemoth for some time. Indeed, in the most recent quarter, ads on Amazon brought in nearly $10.7 billion, up 22% on last year. That haul makes it one of the largest advertising businesses in the world — bigger than YouTube, Snapchat and Twitter (now X), which combined for just $9.3bn of ad revenue in their most recent quarters.
Remarkably, Amazon’s ad business only made up ~8% of its whopping $134 billion net sales for the period, and some industry experts believe that margins in the ad division could be “well over 50%”, which would mean it brought in as much profit as the company's much-laudedAWS business in 2022.
Prime Video ads, on the other hand, are likely to be a lot less lucrative, as they won’t be shown to people with what the marketing industry calls “high intent”. When you search for “air fryer”, and Amazon shows you a sponsored air fryer brand in the search results, there’s a much higher chance that you’ll buy it than if you’d just seen it in-between episodes of your favorite show.
