Discussions are underway about how to introduce ads to the streaming service, but a decision hasn’t been made and the company could choose not to add the new tier, The Wall Street Journal (WSJ) reported Wednesday (June 7), citing unnamed sources.
Reached for comment by PYMNTS, an Amazon spokesperson said in an email: “We don’t comment on rumors or speculation.”
Creating an ad-supported tier would generate more revenue at a time when the company is more focused on profitability across its businesses and would meet ad buyers’ demand to place ads within buzzworthy streaming content, according to the WSJ report.
Amazon already includes ads in its sports coverage, offers product placement in some shows and provides a free, ad-supported video service called Freevee, the report said.
The company’s discussions of an ad-supported tier of Prime Video come at a time when Amazon has been cutting costs companywide, spent $7 billion last year on content to be included with Prime, and has seen its digital ad revenue in other divisions continue to grow, per the report.
Ad-supported streaming services have been becoming more common as a way to expand to a wider audience who may not be able to afford a premium plan, to maintain brand relevance with advertisers and to improve the bottom line.
For example, Netflix launched an ad-supported plan in November 2022.
PYMNTS research has found that when consumers cut back on billed services, streaming is the first to go.
Fifty-five percent of consumers said they would cancel streaming subscriptions if they needed to reduce the bills they received each month, according to “The One-Stop Bill Pay Playbook: Drivers of Consumers’ Bill Payment Priorities,” a PYMNTS and Mastercard collaboration.
The report found that the share of consumers who said they would cut back on streaming was greater than that saying the same of any other service.