Amazon has announced that from 5 February 2024, its Amazon Prime Video customers in the UK and Germany will see “limited” ads unless they pay £2.99 per month to remove them.
Why?
Amazon says that in view of the fact it won’t be making changes in 2024 to the current price of Prime membership, and that it will continue investing in content and keep increasing that investment over a long period of time, it will be adding the “limited” adverts that customers must pay to remove.
In the announcement about the pay-to-remove ads, Amazon listed the many benefits of the Prime Service, and its heavy investment in the service. More specifically, it’s also likely that its renewals of hit series like Redemption and The Boys, its deal with Games Workshop (bringing Warhammer 40,000 to cinema screens) and its plans for other popular content like a series based on the video game Fallout, may also be used to balance out the cost/value analysis in the minds of customers.
The online retail and tech giant and streamer is also keen to stress that it will “have meaningfully fewer ads than linear TV and other streaming TV providers.”
That said, live content such as sports will continue to include advertising whether customers pay for Prime ad removal or not.
Ad-Free Option Later
Amazon has also said that it will be adding a new ad-free option but will share the price of that option at a later date.
How And When?
Amazon says no action is required for Prime members as the “gradual” rollout of the ads takes place and that it will email Prime members several weeks before ads are introduced into Prime Video. The email will also contain information on how users can sign up for the ad-free option and will, presumably, give the price of the ad-free service.
More Expensive Than The US And Germany
Although customers in the US and Canada will see ads rolled out earlier than in the UK (from 29 January), at US $2.99 (£2.35) to stop the ads, this works out cheaper than for UK customers. It is also understood that customers in Germany will have a better deal by only having to pay the equivalent of Germany will pay £2.60.
Competitors
Amazon Prime’s competitors, Disney+ and Netflix, have also introduced their own cheaper ad-supported memberships (and price rises). For example, back in August 2023, Disney+ announced its plan to introduce a cheaper streaming option with adverts in the UK in November (due to falling profits). Also, it was back in November 2022 when Netflix launched its ‘Basic with Ads’ streaming plan.
What Does This Mean For Your Business?
For Amazon Prime, adopting the limited ads that require payment to remove them idea provides an extra revenue stream which could be used to contribute to its investment in content creation thus enhancing the platform’s offerings and competitiveness.
The email to be sent to customers about the ads also provides Amazon Prime with an opportunity to get customers’ attention and highlight its ad-free option in a more ‘under-the-radar’ way in what is a highly competitive streaming market.
Since the boom-time of the pandemic when streaming services were prioritised and multiple users per account tolerated, the post-pandemic saw user numbers drop, e.g. for Netflix. This led to the leading streaming platforms having to increasingly explore varied revenue models, including ad-supported tiers in order to offer more attractive and diversified subscription options to retain and attract a broader subscriber base in this highly competitive space. Amazon Prime, therefore, like Netflix and Disney+, is now offering ad-free options to increase user numbers and attract this broader range of customers (more price-sensitive viewers) thereby intensifying the competition among streaming services.
However, although Amazon Prime’s move could provide new revenue opportunities, it also presents challenges and choices for customers, who now must weigh the trade-off between tolerating ads or paying more for uninterrupted viewing, thereby potentially unsettling them and lowering barriers to exit. As Amazon’s announcement about the change shows, it’s hoping that its commitment to a lower ad volume compared to other platforms could mitigate some potential viewer dissatisfaction and that reminding customers of the many benefits of its services may soften the blow.
Amazon’s business-changing model for streaming is, therefore, an expected reflection of the changing landscape of the highly competitive streaming services market, as providers continuously adapt their strategies.