Amazon Prime Video to Introduce Ads in 2024, Potentially Generating $7 Billion in Revenue
In a move that could significantly boost its ad revenue, Amazon has announced plans to introduce advertisements within Prime Video starting in early 2024. According to three Wall Street notes, these ads have the potential to generate between $6 billion and $7 billion in revenue. Amazon estimates that the ads will reach approximately 115 million monthly users in the United States.
UBS analysts predict that Prime Video ads will contribute $6.2 billion in incremental revenue to Amazon’s US ad business and an additional $1 billion to its ad business outside the US. They arrived at this estimate using 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 revenue potential of Prime Video ads. Wedbush recently stated that if all Prime Video users opt-in to watching ads, Amazon could earn an additional $7.2 billion in ad revenue. Evercore analysts expect Prime Video ads to generate $7 billion in annual ad revenue, assuming three minutes of ads per hour. This ad load is slightly lower than that of Disney+, Netflix, and Warner Bros. Discovery’s Max, which have four to five minutes of ads per hour.
UBS anticipates that Amazon’s ad load could increase to approximately six minutes per hour. They also estimate that Prime Video ads will have a cost per thousand impressions (CPM) of $30 to $42, which is comparable to the rates charged by Netflix and other premium streaming services. Wedbush analysts, on the other hand, expect Amazon to charge $50 CPMs for Prime Video ads.
Amazon projects 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, emphasizing its shopping-heavy 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 introduction of ads on Prime Video will first occur in the US, UK, Canada, and Germany in early 2024. It will then be expanded to France, Spain, Italy, Mexico, and Australia later that year. Prime Video users will have the option to opt out of advertising by paying an additional $2.99 per month.
It’s important to note that Mathias Döpfner, CEO of Axel Springer (Business Insider’s parent company), serves as a board member for Netflix.
Source: [Business Insider](https://www.businessinsider.com/inside-amazons-pitch-for-prime-video-ads-2023-9)