Ad-supported streaming services are hot in an industry looking to boost revenue per user, and Amazon is reportedly looking into its own for Prime Video.
Christopher Saunders/Amazon Prime Video
Amazon's Prime Video service is prepping an ad tier — and it could mean you end up paying more money if you want to keep your viewing ad-free, The Wall Street Journal's Jessica Toonkel reported Wednesday
Amazon is "planning to launch an advertising-supported tier of its Prime Video streaming service as it looks to further build its ad business and generate more revenue from entertainment," Toonkel wrote, citing "people familiar with the situation."
Amazon declined to comment to Insider.
"In recent years, Prime Video has gotten more aggressive about running promos prior to its shows and including ad-filled sports broadcasts," Insider Intelligence principal analyst Ross Benes said. "Given these developments, putting midroll and pre-roll in Prime Video programs isn't that big of a step."
This potential move by Amazon shouldn't come as a surprise to those watching the industry in recent months. Ad tiers have been the hottest thing in streaming and have been seen as a way to push up ARPU, or the average revenue per user. Netflix even shed its legendary aversion to ads, and the move seems to be paying off. Amazon also has Freevee, its free, ad-supported streaming service.
So, if streamers can use advertising to make more money per user, that should be great for the consumer, right? Well, not necessarily.
As Disney CEO Bob Iger laid out recently, introducing ads can be a way for streaming services to continue to raise prices on ad-free offerings without losing customers.
There could be something like that in the works at Amazon.
Right now, Prime Video is available on its own for $8.99 per month, but most people get it bundled with Amazon's Prime membership, which runs $14.99 per month (or $139 per year).
"Amazon is discussing a variety of ways it could introduce ads in Prime Video, people familiar with the matter said," Toonkel wrote. "One option would be to bring more advertising to existing Prime subscribers and give them an option to pay more for an ad-free alternative and other features, some of the people said."
In other words, Amazon could be getting ready to charge you more money — the question is just whether you pay with cash or with the time you spend watching ads.
A price hike by any other name?
