Viewers of landmark series on Amazon Prime Video like “The Boys” or “The Marvelous Mrs. Maisel” will soon be offered something never made available on the service before: TV commercials.
Amazon Prime Video, one of the last mainstream streaming services to eschew the injection of regular commercial breaks into its movies and shows, plans to start letting them run early next year. Amazon follows a host of other streaming hubs — including Disney+, Netflix, and Warner Bros. Discovery’s Max– that also offer ad-supported tiers, a move that suggests the world of streaming may just eventually mirror the world of traditional television in the not-too-distant future.
“The TV industry has really never been able to truly control itself when it comes to aggressive monetization,” says Tim Hanlon, CEO of Vertere Group, a media-industry consultancy.
The company says it plans to run fewer ads on Amazon Prime Video than traditional broadcasters or broadband rivals. Four minutes per hour seems to be a benchmark for the lowest amount of ad time on a streaming platform. Commercials will first appear the U.S., U.K., Germany, and Canada in early 2024, followed by France, Italy, Spain, Mexico, and Australia later in the year. Those who want to keep Amazon Prime Video ad-free can still do so — for an additional $2.99 per month in the U.S. on top of the annual subscription to Amazon’s overall Prime service.
Amazon declined to make executives available for comment.
Most media-sector executives agree that streaming video represents the future of the business, and companies ranging from NBCUniversal to Apple have scrambled to make comedies, dramas and sports available to people who no longer watch traditional broadcast or cable TV. And yet, doing so is costly, requiring millions of dollars in content and infrastructure costs — all while new entrants take to the field. Wall Street initially encouraged companies like Paramount Global and Fox Corp. to chase after Netflix, Amazon Prime Video and Disney’s Hulu. Now, investors are demanding timelines of when all the activity will be profitable.
Such pressure has spurred even the most resistant streamers to embrace advertising. Executives from Netflix for years insisted the service would never rely on commercials. Earlier this year, the company planned to mount a glitzy presentation during the TV-industry’s annual “upfront” week, when networks try to carve out deals with Madison Avenue.
Amazon said the decision to run ads during Prime Video selections would help it “continue investing in compelling content and keep increasing that investment over a long period of time.” In addition to paying millions for the rights to the NFL’s “Thursday Night Football,” Amazon acquired MGM Studios in May of 2021 for $8.5 billion. Over the years, it has launched premium series including “The Lord of the Rings: The Rings of Power,” “Tom Clancy’s Jack Ryan,” and “The Wheel of Time.”
Big media companies like CBS and Disney have thrived for decades on two big sources of revenue: advertising and subscription fees from cable and satellite companies. Streaming services, many of them launched with few ads, and, sometimes, none, remove a major source of cash flow.
“It’s a lesson that we all learned in the 1990s when cable really came into its own,” says Hanlon. “The most beautiful business model is media, where you get paid for subscribers and you get paid for advertising.”
Amazon already runs ads elsewhere. Its Freevee service does not require a subscription and lets users view movies and TV series in exchange for looking at ads that tend to interrupt content at sudden and random moments. And the company also seeks ad support for its weekly stream of “Thursday Night Football.” It has also introduced new commercial formats in such areas as its Amazon Fire broadband service. Some ads pair sponsors with movie recommendations, and others allow subscribers to make quick e-commerce purchases.
Amazon’s decision means few if any of the nation’s large streaming services reject ads outright. Apple TV+ does not run ads in its scripted programs and features.
The introduction of a limited number of commercials to streaming services may soon prompt fears that the big media companies will continue to add more, as they have done on their TV networks. “The relatively small ad loads that we see in today’s premium streaming is probably as good as it is going to get,” says Hanlon. He expects commercials in streaming environments to “become more prominent” over time, with bigger ad loads per break and “more opportunities to squeeze in ad messaging along the way, especially if it is perceived as a cost saver for consumers.”
Most media and content platforms have embraced at least some form of advertising, the executive says, and the companies that run such operations will need to govern the flow of commercials, lest consumers perceive streaming to be as stuffed with ads as the TV networks they once watched. “I’m not certain that advertising solves all problems,” he says. “It could make some of them worse.”