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Feb 22, 2024

Will Amazon Prime’s switch to an ad-supported model lose viewers?

Dayna Lang
Author Dayna Lang

With streaming models shifting to include CTV ads, many advertisers are excited. But with so many viewers upset over the move, can they continue to support these changes? 

Amazon Prime is switching to an ad-supported business model in 2023. As of  February 2024, Prime will start airing commercials, leaving many television enthusiasts wondering if viewers continue to choose streaming services over traditional television options. Will audiences still choose streaming if they have to watch ads to do so? The answer? Yes. 

Even though the introduction of ads to streaming services like Amazon Prime may be fraught with unhappy users, they are still likely to pay for on-demand streaming over cable television. An ad-supported model will likely work well for Amazon since its biggest competitor, Netflix, has seen ample success with the same model since its transition in 2023. 

What has many customers and advertisers apprehensive about Prime’s addition of ads is that users were given little choice in the matter. All accounts automatically switched to an ad-supported default on February 5 and users looking for an uninterrupted experience will have to fork over more dough. 

This is notably different from Netflix’s approach to including ads in its content, in which it launched a new subscription model at a lower price. In contrast, Amazon Prime has instead decided to transition all its customers to an ad-supported model and offer a higher-priced package for those wishing to skip out on the commercials. 

According to eMarketer analyst Max Willens, “With Netflix, Disney+, and now Amazon including ads, the pendulum has completely swung, and streamers are essentially forcing advertising upon CTV consumers.”

Netflix made waves with ad-supported plans in 2023

In 2023, Netflix made waves by banning password sharing and eliminating its lowest-cost subscription tier in short order. The streamer stated that existing basic plan customers would be transitioned to other plans later down the road. This could have been disastrous, as subscribers had already voiced complaints about price increases. 

What Netflix did to appease its customers, however, was launch a substantially cheaper ad-supported tier at the same time. The $5.99 plan attracted ample new customers and now, in 2024 as the last users on the basic plan face higher rates, most are opting to switch to an ad-based plan. 

Netflix saw an increase in revenue of 12 percent by the end of 2023, with ad-supported accounts making up 40 percent of all new sign-ups. 

Will Amazon Prime members keep watching?

In some ways, it feels like Netflix asked its users, requiring users to opt in in exchange for a lower subscription fee, whereas Amazon Prime is telling its users, laying down a new status quo and requiring them to opt out of ads for an additional cost of $2.99 a month. 

Likely, Amazon Prime won’t see a huge number of cancellations, especially given that their subscription service is tied to other Prime services, including free two-day shipping from Amazon. It may, however, see a slowdown in new sign-ups. 

Given that both Netflix and Disney+ now have ad-supported business models (plus Walmart’s acquisition of VIZIO), this move won’t stir the pot too much. But customer dissatisfaction is sure to have its impact. If Amazon waits out the initial wave of complaints and lost views, it’s going to be just fine – joining the ranks of its fellow streaming services in evolving the CTV ad market. 

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