Ad-supported Amazon Prime Video is in development

by Justin Herrick | November 13, 2017

Prime Video isn’t free, though some form of it could be in the future. Amazon currently limits the video streaming service to Prime members who pay $99 per year or anyone who pays $8.99 per month. Its pricing is comparable to Netflix and other competitors, but Amazon now wants to take on the entire industry with something closer to what Hulu once focused so much on.

Amazon, according to AdAge, is developing free version of Prime Video that would be supported by advertisements. The company is actively discussing the product with television networks, production companies, and any additional media companies willing to listen.

The specific structure is unknown. While it’ll definitely be backed by advertisers, the free version of Prime Video give creators their own channels. An unidentified executive executive working on an upcoming Amazon-led project revealed the company would be “sharing ad revenue in exchange for a set number of hours of content each week.” Amazon would also provide audience information. Most video streaming services don’t do this because they’re generating revenue from subscribers, not advertisers trying to get products seen.

It wouldn’t be the first time the company implemented ads on Prime Video. Amazon first engaged with an ad-supported model this year with the NFL’s Thursday Night Football. The games resemble a traditional broadcast with regular commercials like the ones seen on CBS and NBC. Since it’s paying the NFL around $50 million for this season alone, Amazon needs to leverage the appeal of American football to profit on the deal.

To build up the ad-supported variety of Prime Video, the company intends to tap into television shows and movies that are already out there. Amazon is also expected to focus on children, lifestyle, travel, and cooking. Those are areas that can be leveraged to sell products on the main site.

The plan is ambitious, and one industry analyst says Amazon “needs broadcast-quality ad inventory.” It can’t expect to just recycle existing content and have advertisers line up. Amazon will have to pay big bucks to content creators for original programming in addition to relying on Amazon Studios.

Nearly $5 billion is believed to be spent by Amazon on original programming in 2017. That’s because the company is engaged in an arms race against Netflix, Hulu, HBO, and others. If you don’t have exclusive content, no one will watch. And the same can be said for an ad-filled Prime Video. Amazon will need to shell out a ton of money to gain traction with viewers and then lure in advertisers.

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Justin Herrick

Justin is easily attracted to power buttons. His interest in technology started as a child in the 1990s with the original PlayStation, and two...Justin is easily attracted to power buttons. His interest in technology started as a child in the 1990s with the original PlayStation, and two...