Amazon Plans to Increase Fees for Ad-Free Content on Prime Video

Amazon Stock

Amazon (NASDAQ:AMZN) is taking strategic steps to enhance its Prime program, a crucial driver of its growth, with 200 million subscribers globally. The company’s shares have surged 82.2% in the past year, outperforming the Retail-Wholesale sector.

In an effort to further boost its Prime Video service, Amazon recently announced plans to introduce advertisements between movies and TV shows, partnering with IPG Mediabrands to connect brands with relevant audiences. The company intends to keep the number of ads minimal. Additionally, Amazon will roll out a premium, ad-free version of Prime Video at an extra cost of $2.99 per month. These initiatives aim to attract customers to the streaming market by providing diverse streaming options.

Facing competition from streaming giants like Netflix and Disney, both of whom have introduced ad-based tiers, Amazon is adapting to the evolving landscape. Netflix, with 15 million monthly active users on its cheaper, ad-supported tier, is set to offer ad-free episodes as a reward for binge-watchers. Disney’s ad-supported Disney+ plan, launched in December 2022, has garnered significant user growth, with 50% of new subscribers opting for the $7.99 per month plan with ads.

In addition to these competitors, Google’s Alphabet is a significant player in the streaming industry, leveraging the popularity of YouTube by offering both ad-supported and ad-free versions.

To enhance Prime Video, Amazon recently introduced the “dialogue boost” feature, allowing users to increase dialogue volume without affecting background music and effects. The company also expanded Prime Video Channels and the Prime Video Store in Chile and Colombia, adding over 40 local Amazon Originals and live sporting events to its international content portfolio.

These initiatives are expected to contribute to Amazon’s subscription revenues, driving overall revenue growth. The company forecasts Q4 2023 revenues between $160 billion and $167 billion, indicating 7% to 12% YoY growth. The consensus estimate for Q4 2023 revenues is $166.12 billion, with a YoY decline of 11.3%. The 2023 revenue consensus stands at $570.95 billion, reflecting an 11.1% YoY growth, while the earnings consensus is $2.69 per share.

Featured Image: Unsplash

Please See Disclaimer

About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.