USA: Amazon Prime Video ad-tier is growing

With the launch of ads on Amazon Prime Video at the end of January 2024, a significant number of all U.S. TV viewers shifted from watching ad-free only to watching ad-supported video, as reported by Hub Entertainment Research in its “TV Churn Tracker” survey. The proportion of consumers using only ad-supported increased ten percentage points since 4th quarter 2023, while the group who watch only ad-free was down nine.

Historically, streaming services that launched with an ad-supported tier have had the highest level of subscribers accepting ads, and services that either introduced a new ad-supported subscription or defaulted consumers to the ad-free option had the lowest level of accepting subscribers. By opting existing subscribers into the ad tier, Amazon has immediately become the leader with more than eight in ten subscribers using the ad-supported service.

As Amazon Prime Video defaulted tens of millions of their subscribers into the ad-supported service, there was no measurable effect on either Amazon’s subscription levels or the overall rate of SVOD subscription. Similarly, AMC+, the other most recent entry into ad-supported streaming, saw no effect on their overall subscription rates.

Over the past several years, consumer research conducted by Hub and others has demonstrated that the majority of viewers choose watching ads over paying higher subscription fees, and Amazon has taken advantage in launching their ad-supported service. By placing all subscribers on an ad tier, and requiring them to opt out and pay a higher monthly fee, Amazon Prime Video prodded the vast majority of subscribers onto their ad-supported service. It now has the highest proportion of any streaming service of viewers watching ads.

“Virtually overnight, Amazon Prime Video dramatically transformed the video advertising ecosystem,” said Mark Loughney, Senior Consultant to Hub. “Suddenly advertisers have the ability to reach tens of millions of viewers on one platform, with robust targeting capabilities and a vast retail capability. Amazon has immediately launched themselves into ‘must buy’ territory for advertisers and media agencies.”