Amazon Prime Video to Introduce Ads in 2024, Potentially Generating $7 Billion in Revenue
Amazon has announced plans to roll out advertisements on its Prime Video platform starting in early 2024. According to Wall Street analysts, these ads could bring in between $6 billion to $7 billion in revenue. Amazon believes that these ads will reach approximately 115 million monthly users in the United States.
UBS analysts have projected that Prime Video ads will contribute $6.2 billion in additional revenue to Amazon’s US ad business and $1 billion to its ad business outside of the US. The estimates were based on Nielsen data, which suggests that Prime Video is watched for a total of 14.3 billion hours per day in the US.
Other Wall Street firms are also optimistic about the potential of Prime Video ads. Wedbush predicts that Amazon could earn an additional $7.2 billion in ad revenue if all Prime Video users choose to watch ads. Evercore analysts expect Prime Video ads to generate $7 billion in annual ad revenue, assuming an ad load of three minutes per hour.
UBS suggests that Amazon’s ad load could increase to about six minutes per hour. They also anticipate that Prime Video ads will have a cost per thousand impressions (CPM) of $30 to $42, which is comparable to what other premium streaming services charge. Wedbush analysts, on the other hand, predict that Amazon will charge $50 CPMs for Prime Video ads.
Amazon estimates that Prime Video ads will initially reach over 115 million monthly users in the US. The company is also highlighting the premium content available on Prime Video and the shopping habits of its audience. A briefing document sent to advertisers revealed that more than 25% of Prime Video households are likely to have an annual household income exceeding $150,000.
The ads will be introduced on Prime Video shows and movies in the US, UK, Canada, and Germany in early 2024. They will later be rolled out in France, Spain, Italy, Mexico, and Australia. Prime Video users will have the option to opt out of advertising by paying an additional $2.99 per month.
Disclosure: Mathias Döpfner, CEO of Business Insider’s parent company, Axel Springer, serves as a board member for Netflix.