Watch as Amazon Prime Video Jumps Into the Ad-Tier Frenzy

Amazon Prime Video, welcome to the party. You’re a bit late, but there may be some cauliflower left on the veggie platter. (Probably no ranch dressing, though.)

Amazon’s core subscription video service, Prime Video, plans to launch an ad-supported tier, the Wall Street Journal reported on Wednesday, just like Netflix and Disney+ did in late 2022. (And HBO Max, now Max, before them, etc.)

Conversations inside of Amazon are in their “early stages” and have transpired “over the past several weeks,” the newspaper wrote, cautioning that the plans may still not come to fruition. But — and this part is purely IndieWire’s take — they almost definitely will.

Amazon is also in talks with premium-video competitors Warner Bros. Discovery and Paramount to add the ad-supported tiers of Max and Paramount+ to its Prime Video Channels, per the Journal. Users can currently sign up for — and view — the ad-free versions of Max and Paramount+ through Prime Video Channels, which is a popular gateway to third-party streaming apps. Ad-supported Paramount+, officially known as the “Essential” tier, is already available on Roku.

In the future, Prime Video Channels (or, again, Roku — or both!) could become a hub for the true aggregation of streamers into one bundle. Warner Bros. Discovery president and CEO David Zaslav recently said he believes that will happen — and he’s said he’s in. (Zaslav, who was the head of Discovery before merging the company with WarnerMedia, was probably the strongest defender of the cable-television bundle. He’s early money on that same position within the streaming ecosystem.)

What say you, Amazon? “We don’t comment on rumors or speculation,” a spokesperson replied when reached by IndieWire for comment on the WSJ story. Dynamite stuff.

Spokespeople for Max/Warner Bros. Discovery did not respond to our outreach.

Already, an Amazon Prime Video tier with TV commercials feels like a natural with its “Thursday Night Football” games, some Yankees games in the New York market, and live awards shows, which have natural commercial pacing (and yes, commercials). While the pricey NFL package has produced some lackluster games and unimpressive TV ratings to date, it’s provided a pretty seamless user experience from a technical standpoint. Netflix is not yet in a position to say the same.

So far, Amazon Prime Video advertising on regular programming has been pretty much limited to running spots for other Amazon Prime Video movies and shows.

Amazon Prime Video and Apple TV+ have been the last two advertising holdouts in the streaming wars. It is probably no coincidence that the ones to hold their ground are the world’s two largest publicly traded companies (by market cap: Apple is No. 1 and Amazon No. 2): They’re the only ones who could afford to do so.

Both have ad-supported cousins. Amazon’s FAST (free, ad-supported streaming television) service Freevee, formerly IMDb TV, is fully supported by advertising. Apple TV+ offshoot MLS Season Pass, which has every Major League Soccer game and can be a standalone subscription or add-on, has advertising. That’s just how sports works — the athletes need a break, and the platform paying for the pricey rights needs the sponsorship. Amazon is considered among the likely landing spots for an NBA package in the near future.

If streaming video feels like an afterthought to Amazon and Apple — well, it is. The former makes its real money with everyday household items, and the latter makes bank through its smartphones.

Like streaming, retail has been hard-hit by macroeconomic struggles. For Amazon, boosting an already-strong advertising-revenue stream through the addition of streaming video would nicely complement its overall cost-cutting efforts, which have already resulted in tens of thousands of staff layoffs.

In the first quarter of 2023, Amazon’s advertising services accounted for $9.5 billion in sales, up 23 percent from the comparable quarter in 2022. That makes advertising services Amazon’s fastest-growing revenue stream. (The dollar amount is in line with its subscription-services revenue of nearly $9.7 billion.)

“Our advertising business continues to deliver robust growth, largely due to our ongoing machine-learning investments that help customers see relevant information when they engage with us, which in turn delivers unusually strong results for brands,” Amazon CEO Andy Jassy said in prepared remarks accompanying the Q1 financial results.

Amazon’s ad-supported streaming landscape reaches an average monthly audience of more than 155 million viewers, Amazon shared with IndieWire. In addition to Freevee and its live Prime Video programming, Amazon also sells ads on Twitch and Fire TV Channels. The company also gets a piece of advertising from the third-party apps it hosts on Prime Video Channels.

Prime Video is part of Amazon Prime, which costs $14.99 per month and includes other services, most notably the free, two-day shipping on the e-commerce website’s retail items. Alternatively, one can subscribe to Prime Video as a standalone service for $8.99 per month.