The company announced its plan in a blog post today (Sept. 22). "To continue investing in compelling content and keep increasing that investment over a long period of time, starting in early 2024, Prime Video shows and movies will include limited advertisements," they said.
Commercials will roll out first in the U.S., U.K., Canada and Germany, followed by other countries later in the year.
For an extra fee, Prime Video members can pay for an ad-free option. Currently, Prime Video is included for free with Amazon Prime membership, which costs $14.99 a month or $139 a year. As a standalone service, it's $8.99 per month. Members can pay an extra $2.99 a month to eliminate ads.
Amazon noted that they aim to "have meaningfully fewer ads than linear TV and other streaming TV providers."
The company already runs ads in some of its content, like NFL Thursday Night Football and its free streaming service Freevee.
Prime Video is home to originals like The Boys, The Summer I Turned Pretty and The Lord of the Rings: The Rings of Power. The latter is one of the most expensive shows ever made. Additionally, Amazon invested a lot of money in the rights to the Thursday Night Football. In 2022, Amazon's spending on content increased nearly 30% to $16.6 billion. Advertising could help offset those costs.
Streaming services are getting more expensive
Amazon's move comes as no surprise, as rivals like Netflix and Disney Plus have introduced ad-supported tiers in the past year. Other streamers like Paramount Plus and Peacock have run commercials from the start, charging more for ad-free plans. Only Apple TV Plus remains as the last major streaming service that doesn't have ads, though that could be coming down the road. According to The Information, Apple hired a digital video advertising executive earlier this year to build that business.
The streaming industry has faltered in the last couple of years, as subscriber growth has slowed and investors have demanded actual revenues. Netflix, Disney, Amazon and other media companies are now instituting multiple ways to make their streaming services profitable.
Introducing ads is one path. Netflix's password-sharing crackdown is another. It's working, too, as the company reported a 6 million gain in subscribers following the crackdown. Disney Plus will eventually limit account sharing as well.
Additionally, all of the major streaming services have raised their prices in the past year. Disney Plus announced a price hike that will roll out next month, and Peacock recently upped its rate for the first time. Cutting the cord was supposed to be our cheap future, but having multiple streaming services now rivals the bill of cable TV.