Amazon Prime Video Faces Resistance as It Introduces Ads
In a surprising turn of events, it seems that there is one thing Amazon can’t sell: an ad-free tier of Prime Video. According to survey data from CivicScience, less than 10 percent of Amazon Prime members are willing to pay an additional $2.99 per month to watch the streaming service without commercial breaks.
Starting January 29, Amazon will be launching ads on Prime Video, marking the first time in over a decade that the platform will offer an ad-supported tier. The company has taken a similar approach to Disney+ by offering the ad tier at the current monthly price and increasing the cost for those who want to continue watching without commercials.
CivicScience conducted surveys in October and late December to gauge consumer reactions to the impending change. The majority of respondents in both surveys stated that the introduction of ads would not impact their usage of the service. However, a combined plurality of respondents in each survey expressed that they would likely use Prime Video less frequently or cancel their Prime subscription altogether. In October, 51 percent of respondents felt this way, while the more recent survey showed 43 percent.
While it is expected that fewer users will actually cancel their Prime subscriptions than the survey suggests, it is clear that Amazon should not anticipate a surge in subscriber fees once the ad tier is implemented. Additionally, about 12 percent of Prime members surveyed admitted to not using Prime Video at all, indicating that they primarily subscribe for other benefits such as free two-day shipping.
These findings align with recent polls that show streaming users are willing to tolerate ads in exchange for a lower monthly cost. A survey conducted by CivicScience for VIP+ revealed that 56 percent of consumers either don’t mind ads or are unwilling to pay more for an ad-free experience.
Antenna, a streaming analytics firm, also observed a new monthly high for sign-ups to ad-supported SVOD plans in the U.S. in November. These plans accounted for over half of premium SVOD sign-ups for the first time ever.
In light of these trends, Amazon’s decision to introduce ads on Prime Video comes at an opportune time. As streaming ad tiers gain acceptance among consumers, the tech giant is expected to significantly increase its CTV ad revenues. Insider Intelligence forecasts that Amazon will more than double its CTV ad revenues from around $1.4 billion in 2023 to over $3 billion this year.
While some Prime Video users may be put off by the presence of ads, it seems that the future of streaming video is heading towards a predominantly ad-supported format.