Amazon Prime members may notice a change in the appearance of Prime Video, starting today. Viewers will encounter “limited” advertisements in shows and movies, and to avoid ads, they can opt to pay an additional $2.99 per month. Amazon had initially announced this change in September, and the implementation is in line with a broader trend seen across streaming services.
Streaming platforms, including Prime Video, are incorporating ads and adjusting pricing for ad-free tiers as they shift their focus from acquiring subscribers to generating revenue. This shift is driven by investor pressure to monetize services, even at the expense of potential subscription losses. In December, Amazon informed Prime members that the introduction of ads is a strategy to invest in compelling content and increase that investment over the long term. The goal is to have significantly fewer ads compared to traditional linear TV and other streaming providers.
This move aligns with industry trends, as Netflix increased the price of its premium ad-free plan in the U.S. by $3 per month to $22.99 in October. Disney+ also raised its prices twice within a year, with its ad-free plan reaching $13.99 per month. Hulu, majority-owned by Disney, increased its ad-free subscription by $3 to $17.99. Other services, such as HBO Max and Peacock, also experienced their first-ever price hikes.
Streaming companies are grappling with slowing consumer demand post-pandemic, affecting revenue growth. Simultaneously, production costs for shows are rising, contributing to the need for additional revenue. Amazon’s ad-supported Prime Video is expected to generate over $3 billion in additional revenue this year, with a projected increase to $7 billion in 2026, according to a Morgan Stanley report.
While Amazon has not disclosed the duration of the ad breaks, this change in Prime Video’s ad strategy is seen as a response to financial challenges and an effort to continue investing in premium content, including popular programs like “Thursday Night Football.” The subscription cost of Prime, which includes access to Prime Video, is $139 per year.