The Hollywood Reporter has a story about the degree to which Amazon Prime Video's new ad tier - scheduled to debut on January 29 - is likely to have an enormous impact on advertisers, while bolstering Amazon's bottom line.
Here's how it frames the story:
"On Jan. 29, Amazon will unleash what one top advertising executive calls a 'tornado' that will 'upend' the streaming video landscape. The company will flip a switch and turn on ads for all of its Prime Video viewers. Users will have the option to pay $3 a month to remove the ads, but as the executive quips: 'Almost no one will do that, are you kidding me?'
"After all, people are paying Amazon for the fast shipping. Reacher and Thursday Night Football are thrown in for free. It’s a move that has marketers salivating and a few legacy media executives anxiously waiting to see what happens.
"The move will instantly turn Amazon into a streaming-ad juggernaut, and the largest ad-supported subscription streaming platform in the marketplace with tens of millions of users, leapfrogging the likes of Netflix in the process.
"Amazon, run by Andy Jassy, has always been coy about just how many Prime subscribers it has (the last official number, in 2021, was 'more than 200 million'), but no one disputes that its reach is almost unrivaled. Consumer Intelligence Research Partners estimates that there are about 168 million Prime subs in the U.S. alone, as of 2023.
"If just half those subs watch Prime Video content, it would be comparable to Netflix’s penetration in the U.S. (77 million) and significantly more subs than the likes of Hulu, Peacock or Paramount+."
- KC's View:
Where this becomes relevant to the MNB audience, I think is in the dollars that instantly will flow to Amazon's bottom line, giving the company even more financial resources with which to do battle in the retail space.
Which will create even greater pressure on competing retailers to find ways to differentiate themselves.
Which is not to say that I am a fan. I believe that when the switch is thrown by Amazon, there is at least a possibility that the user experience will be degraded just a little bit more. I say "more" because I think the plethora of ads on Amazon's site, often making it challenging to cut through the crap to find what I really want, has diminished the shopper experience. It is still good enough - but I don't think good enough is good enough. I don't think it makes sense to have as your goal finding out how far you can push the advertising envelope before you alienate your audience/shoppers. Because if that happens, it'll be hard to get them back.
There's no question that this is the trend - Variety reports that Netflix's new ad tier has eclipsed 23 million global monthly users (though "users" is different from "subscribers").
Also, one quick note to the advertising executive quoted in the Hollywood Reporter. As soon as I got the email from Amazon about the new ad tier, I immediately opted out - three bucks a month to avoid advertising, at least for the moment, seems to reasonable cost.