Amazon CEO Says Ads On Prime Video Have Started Strong

Amazon CEO, Andy Jassy, has said ads on Prime Video have gotten off to a good start. Amazon introduced ads to Prime Video earlier this year, forcing existing subscribers to pay an additional $3 a month to retain an ad-free viewing experience.

The comments were provided during Jassy’s most recent letter to shareholders. In the letter, Jassy explains that the company “expanded our streaming TV advertising by introducing ads into Prime Video shows and movies” and that “streaming TV advertising is growing quickly and off to a strong start.”

Jassy also noted that streaming TV advertising now has the potential to reach over 200 million monthly viewers across Amazon’s most popular entertainment offerings, including “hit movies and shows, award-winning Amazon MGM Originals, and live sports like Thursday Night Football.”

The letter also revealed Amazon’s Advertising business grew from $38 billion in 2022 to $47 billion in 2023. The 24% YoY increase was credited as primarily being driven by sponsored ads. Jassy added that Sponsored TV, a self-service solution for brands, now makes it possible for ad campaigns to appear on up to 30+ streaming TV services, including Amazon Freevee and Twitch.

In spite of painting a positive picture of the introduction of ads to Prime Video, not everyone has been a fan of the change. In February, a class action lawsuit was filed against Amazon, claiming the addition of ads is “unfair” and a breach of contract.

Ads are not the only difference between the two Prime Video tiers either, with ad-supported subscribers having also lost access to some premium features, including Watch Party support. Likewise, upgrading a primary account in an Amazon Household doesn’t result in the other linked accounts regaining ad-free access, creating an uneven Prime Video experience among Household members.

On a more general note, Jassy said Amazon has “increasing conviction” that Prime Video can become a a profitable business on its own. In explaining the logic behind this, Jassy pointed to “the continued development of compelling, exclusive content,” with Thursday Night Football, Lord of the Rings, Reacher, The Boys, Citadel, and Road House all cited as examples.