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Report: Amazon Plans to Shelve Ad-Supported Streaming Service Freevee

Amazon is reportedly planning to discontinue Freevee, its free, ad-supported streaming service.

The move comes as part of a broader effort by Amazon to focus its advertising and product efforts on Prime Video, which rolled out an ad-supported tier last month, according to a Wednesday (Feb. 21) report on AdWeek, which cited unnamed sources familiar with the matter.

“If the question is whether or not Amazon will persist with two stand-alone streaming services,” said one person familiar with the situation, according to the report, “I’m certain the answer is no.”

Amazon Prime and Freevee have an overlap in their content, and the redundancy is pushing Amazon to wind down Freevee, according to three people familiar with the matter, AdWeek said.

However, an Amazon representative denied the move.

“There are no changes to Freevee,” said the representative when reached by PYMNTS and AdWeek. “Amazon Freevee remains an important streaming offering providing both Prime and non-Prime customers thousands of hit movies, shows, and Originals, all for free.”

The introduction of ads to Amazon Prime videos could net the company an additional $5 billion in annual revenue, PYMNTS reported in January, citing an analysis from the Bank of America.

Viewers who want watch ad-free entertainment on Amazon Prime will need to pay an extra $3 per month on top of their current Amazon Prime membership fee.

Those extra payments may generate around $1.8 billion for Amazon, PYMNTS reported, on top of the roughly $3 billion in video ads Amazon will sell. The Bank of America report estimated that 70% of subscribers will choose to sit through commercials and avoid the extra fee.

The addition of Amazon’s ad-supported tier comes as more American consumers who have multiple subscriptions to streaming services are increasingly cutting back.

Roughly a quarter of U.S. subscribers to major services like Netflix, Amazon and Disney have canceled at least three of them in the last two years, up from 15% two years ago, PYMNTS reported Jan. 2.

As more consumers pull back, streaming companies are trying new ways to increase their revenue.

For instance, Disney+ is reportedly looking into launching shopping options on its streaming service, while Netflix is reportedly considering adding in-app purchases and ads to its games.