Amazon Prime Video Faces Resistance as It Introduces Ads
It seems that even Amazon has its limits when it comes to selling a completely ad-free experience. 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 Prime Video without commercial breaks.
Starting January 29, Amazon will be launching ads on Prime Video, marking a significant change for the streaming platform that has remained ad-free for over a decade. The company has taken a page out of Disney’s book by offering the ad-supported tier at the same price as the current ad-free version, while increasing the cost for those who want to continue watching without interruptions.
CivicScience conducted surveys in October and December to gauge consumer reactions to the upcoming change. The majority of respondents in both surveys stated that the introduction of ads would not significantly impact their usage of the service. However, a combined plurality of respondents in both surveys expressed that they would use Prime Video less or cancel their Prime subscription altogether.
While the drop in numbers suggests that fewer users may actually cancel their subscriptions than initially anticipated, it is clear that Amazon should not expect a surge in subscriber fees once the ad-supported tier is introduced. Additionally, around 12 percent of Prime members surveyed admitted to not even using Prime Video, indicating that they primarily subscribe for other benefits such as free two-day shipping.
These findings align with recent polls showing that streaming users are willing to tolerate ads in exchange for a lower monthly cost. According to a survey conducted by CivicScience for VIP+, 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 in sign-ups for ad-supported SVOD plans in the U.S. In November, such 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 this year, projected to surpass $3 billion, according to an Insider Intelligence forecast.
While the presence of ads may deter some Prime Video users, it appears to be a necessary step as streaming video evolves into a predominantly ad-supported format.