Amazon announced this week that starting January 29th, its Prime Video streaming service will begin showing ads during movies and TV shows. This change eliminates Prime Video’s previous ad-free streaming, unless subscribers pay an additional monthly fee.
Previously, Amazon Prime’s video service did not show any advertisements to subscribers. Now, those who want to avoid ads entirely will have to pay $2.99 per month on top of the regular Prime Video or Amazon Prime membership cost. Without the add-on fee, Prime Video viewers will start seeing commercials interrupting their content at the end of January.
The move comes as streaming services increasingly look to advertising to supplement subscription revenue. While competitors like Hulu and Peacock offer ad-supported options at lower price points, Amazon is flipping that model by making ads the default and charging extra to remove them.
Analysts say it’s an effort to squeeze more money out of Prime members without raising the base subscription cost. But some worry it could backfire by pushing loyal customers to cancel Prime or downgrade their memberships.
Amazon began signaling the change months ago, though it’s only now revealed the $2.99 monthly ad-free add-on fee. The company claims it will show “meaningfully fewer ads than linear TV,” but it’s still a major shift for a service that built its reputation around uninterrupted streaming.
The change highlights the challenges even for major players like Amazon in building financially sustainable streaming businesses. Continued investments in expensive original content make turning a profit difficult. Now Prime members will pay the price, unless they pony up the extra ad-free fee each month.
Source: The Verge