Amazon will force users to pay extra to remove ads from Prime Video in 2024

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Starting in 2024, Amazon’s Prime Video service will start showing “limited” advertisements within its content, the company announced Sept. 22, 2023.

Prime Video is currently included at no additional cost to subscribers of the company’s popular Prime service, which costs $139 a year and gives members, among other benefits, free fast shipping on items from Amazon and access to a variety of streaming content.

Amazon says that customers wishing to view content without ads will have to pay an additional $2.99 a month starting in 2024.

That would effectively raise the cost of a Prime subscription with streaming offerings in line with what is offered now to $174.88 in the U.S.

Put another way, the ad free version of Prime Video will essentially cost $35.88 a year; though it is not sold separately.

No details were available about how many minutes of ads might be shown per hour, a common metric used by streamers who sell ads.

Amazon spent over $16 billion on content licensing for its Prime Video service in 2022. That included “Thursday Night Football” NFL games, so it’s easy to see why the company is looking for more revenue sources.

Inserting ads is a way to bump that up without raising Prime’s price for everyone as other costs, such as shipping, fulfillment, logistics and labor increase across Amazon’s divisions.

It’s not immediately clear how many ad-free plan signups Amazon might be forecasting, but trends in the industry seem to indicate consumers are willing to put up with ads in exchange for paying a little less a month. This could be driven by the cluttered streaming market that forces many avid viewers to pay for multiple services at once.

It’s also not clear how much revenue Amazon is expecting to bring in from ads or if it thinks ad-free upcharges will generate more revenue than showing commercials could.

CPM rates, which is a common model for selling ads on both linear and streaming TV, remain relatively low on streaming despite the fact viewership has been shifting away from traditional broadcasts that often could historically generate hefty ad rates.

Advertising on streaming could possibly generate higher CPMs if more targeting was allowed, but most streamers have largely shied away from offering detailed demographic targeting due to privacy concerns.

Amazon already owns and runs the FAST streamer Freevee, which forces users to watch ads in exchange for viewing content, including exclusives such as Judge Judy Sheindlin’s “Judy Justice.”