Prime Video is reportedly planning to launch an ad-supported tier as Amazon looks to bring in additional revenue from its entertainment programming.
Sources told the Wall Street Journal that the tech giant’s discussions are in the early stages and have been ongoing over the past several weeks. The report notes Amazon is “discussing various ways” to roll out ads on the streamer and planning for “short” ad breaks. One option reportedly under consideration is bringing more advertising to existing Prime subscribers and giving them the option to pay more for an ad-free alternative as well as other features.
Prime Video is currently included with Prime membership for $14.99 per month and is offered in a standalone version for $8.99 per month. Advertisers can currently reach an average monthly audience of more than 155 million viewers in the U.S. alone through Amazon’s ad-supported streaming TV offerings. Advertisers can currently engage with Amazon customers through streaming offerings such as the NFL’s Thursday Night Football, its ad-supported streaming service Freevee, Twitch, Fire TV Channels and third-party publishers.
In the first quarter of 2023, Amazon reported $9.5 billion in ad revenue, a 21% year over year increase.
Separately, the Journal is reporting that Amazon is in talks with Warner Bros. Discovery and Paramount Global to add the ad-based tiers of Max and Paramount+ to Prime Video Channels. Users can currently sign up for ad-free Max and Paramount+ through Prime Video Channels.
An Amazon spokesperson declined to comment on rumors or speculation. A representative for Max declined to comment, while a spokesperson for Paramount did not immediately return TheWrap’s request for comment.
The report comes after Amazon laid off approximately 100 staffers in its Amazon Studios and Prime Video business in April as part of a cost-cutting effort.
“Like many businesses, we have been closely monitoring economic conditions and our organizational needs and have made the decision to adjust resources,” an Amazon spokesperson told TheWrap in a statement at the time. “As a result, a small number of roles will be eliminated on some teams. We will be supporting impacted employees through this transition and thank them for the work they have done on behalf of our customers.”
The spokesperson noted that new roles would be added in areas for future growth.
In February, chief financial officer Brian Olsavsky said that Amazon invested approximately $7 billion across its original, live sports and licensed third-party video content included with Prime, up from about $5 billion in 2021. Prime Video does not break out quarterly subscriber figures.
“We regularly evaluate the return on the spend and continue to be encouraged by what we see, as video has proven to be a strong driver of Prime member engagement and new Prime member acquisition,” Olsavsky told analysts and investors at the time.
Shares of Amazon have fallen more than 3% during Wednesday’s trading session, while shares of Paramount and Warner Bros Discovery were up about 4% and 5%.