How will Amazon Prime users react to ads? That's what a recent study titled "Fact vs. Fiction" conducted in November 2023 by the consulting firm Hub Entertainment Research aimed to analyze. The work is framed within the context of Amazon Prime Video's new ad-supported service. This implies that the user will have to spend more money to get rid of the ads. The work took into account American viewers aged 14 to 74 years. Next, we will go over some of its main points.
The first point in question is that, in the survey conducted in Q4 2023, only 25% of Prime Video viewers knew that ads were on the way. Here's a spoiler: most Amazon subscribers will opt for ads instead of paying extra for an ad-free experience. According to this analysis, people don't "hate" advertising, and if choosing to watch it saves them money, they might even "love" it. Amazon Prime's new ad tier is just more evidence that the future of video will look a lot like the ad-supported cable past.
Secondly, there are differences among subscribers: those who do plan to pay for an ad-free experience are the most committed to streaming on Amazon Prime. They are the most likely to have subscribed wholly (10%) or partly (28%) for the video service itself. Another notable fact is that 15% of the respondents said they would stop using the service. However, this is likely not to be entirely fulfilled when considering the engagement with specific titles on the platform.
At launch, Amazon Prime Video will immediately have scale. Estimates already put Amazon Prime first in subscribers among U.S. video services. Nearly six in ten of Amazon's base of subs will accept advertising, likely jumping ahead of the ad-supported versions of Netflix, Max, Disney+, Peacock, and Paramount+ and possibly reaching parity with Hulu.
Finally, this business development by Amazon may pose additional challenges for linear TV advertising budgets, which are already under pressure. This is particularly significant for smaller cable groups that may not be affiliated with extensive streaming services such as Hulu, Peacock, or Paramount+.
