Next month, Amazon Prime memberships will begin to include access to Prime Video with advertising breaks. Ad-averse subscribers will have the option to pay an additional $2.99/month to forgo the commercials.
Amazon joins almost every other streaming platform in bringing advertisers to their platform, following in the footsteps of Disney’s Disney+, WBD’s Max, and Netflix. As with the others, Amazon had highlighted its ad-free entertainment when it launched Prime Video. Now, advertising on streaming platforms is seen as a natural evolution for streaming as it grows at the expense of linear cable and broadcast TV channels.
At most traditional media companies, profits are withering from once-lucrative cable deals while costs are exploding to build and maintain direct consumer streaming services. Alas, it has become clear that subscriber fees alone will not be sufficient to achieve profitability, leading to the introduction of advertising, as a tried-and-true income stream for entertainment channels.
As streaming rates are rising, it is increasingly clear that streaming is becoming the new cable. For the time being, Prime Video’s ad-supported tier is still free – with your Amazon Prime membership – and will include only four minutes of advertising per hour.
But it’s almost certain that costs and the amount of advertising will increase over time, as Amazon tries to offset ballooning costs to produce original series such as ‘Citadel’ and ‘The Lord of the Rings: The Rings of Power’ and media rights to broadcast NFL Thursday Night Football for a hefty $1 billion annually for the next 11 years.
See also: Did Amazon Just Overpay for ‘Thursday Night Football’? (The Motley Fool)