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The Cord-Cutters Blog

Amazon Prime to add commercials
By Bill Jackson
Posted: 2023-09-24T16:07:00Z

This past Friday, Amazon announced it will start including advertisements on content streamed on its current Prime Video service in early 2024, making it the most recent premium video-on-demand streaming service to augment subscriber fees with additional revenue from commercials in its business model. Current Prime subscribers will be offered an option to maintain an ad-free service for an additional $2.99/month. In the United States, an Amazon Prime membership, which includes access to Prime Video, currently costs $14.99 per month. A subscription to Prime Video alone costs $8.99 per month.

Other premium (and formerly no-ads) streaming services have already moved in this direction, including Netflix and Disney+ who already offer customers an option for lower prices for ad-supported subscriptions. In the past post-pandemic year, most premium streaming services have experienced stagnant or declining subscriptions and profitability issues in the face of rising costs and an ultra-competitive & fragmented streaming marketplace. Offering ad-based options has become a key strategy in their attempt to maintain market share, stem financial losses, and fund ongoing new content development.

Netflix, which moved last November to tiered subscriptions (with-ads or no-ads), attributes this strategy as having driven 2nd quarter 2023 increases in both revenue and subscribers. New Netflix subscribers now choose between an ad-supported plan for $6.99/month or one of two ad-free plans for either $15.49 or $19.99.

Disney+ which introduced its ad-supported tier last December, will now be increasing its ad-free tier price on October 12th from $10.99 to $13.99, but will maintain its current $7.99 price for subscribers of the ad-supported tier.

Other premium streaming services like Paramount+, and HBO/Max have moved to similar tiered pricing strategies. Although few of us enjoy commercials, there are two positives in this market shift. First, the advertising load per hour on these premium services is generally no more about 4 minutes per hour, well below the roughly 15 minutes per hour of traditional TV broadcast networks. Second, as described above, the monthly costs associated with these premium streamers ad-supported tiers will be very significantly lower than the ad-free option. And, in addition, all these premium streamers allow you to change or cancel your subscriptions on a month-to-month basis, so it will be easy to give some of these newer limited-ads services a try.

As always, comments & feedback are welcome

Bill Jackson