How Amazon’s New Ad Plan Hurts Netflix

Photo from Thibault Penin via Unsplash

How Amazon’s New Ad Plan Hurts Netflix

By Movieguide® Contributor

Amazon’s recent move to default ad-supported streaming has driven ad prices down, affecting other streamers. 

“Amazon defaulted its Prime Video members to its advertising plan in January 2024, helping it garner the largest number of subscription OTT [Over The Top, meaning content is streamed without cable or satellite] ad-supported viewers of all major US streaming providers,” EMarketer reported

Movieguide® previously reported on this change:

As January comes to a close, Amazon Prime Video becomes the final major streaming service to incorporate ads onto its platform, as it expects to add up to $3 billion a year through commercials.

Starting on January 29th, Prime Video users will now get ads while watching TV shows and movies unless they pay an additional $2.99 per month on top of their Prime subscription. Though the platform promises to feature “meaningfully fewer ads than linear TV and other streaming TV providers,” this new addition will lead to incredible profits for the company.

Morgan Stanley predicts the company will generate $3.3 billion in Prime Video ad revenue during 2024, rising to $5.2 billion in 2025 and a staggering $7.1 billion in 2026. Analysts from MoffettNathanson are less optimistic, forecasting $1.3 billion for 2024 and $2.3 billion for the following year. Either way, Amazon will take a lion’s share of profit through this simple change.

This move could make Amazon as much as $4.72 billion in OTT ads — and it’s already affecting other streaming services’ finances. 

“Netflix is asking some brands to pay roughly $29 to $35 for reaching 1,000 viewers, according to advertisers and ad buyers, a significant decrease from the $39 to $45 that it charged some advertisers last summer,” Yahoo! Finance wrote

Netflix is already planning ways to boost profits, including sponsoring live events and creating in-person events tied to their content, as well as “offering brands options that include product placement,” per LinkedIn. 

“Brands have long salivated over the possibility of having their products and services integrated into programs running on Netflix,” Yahoo! Finance noted. “Since its inception, Netflix has done little paid product integration.”

Movieguide® previously reported on another move Netflix is making to increase profits:

Netflix is about to launch 14 new video games, including one based on EMILY IN PARIS and THE DRAGON PRINCE: XADIA and “Tales of the Shire: A The Lord of the Rings Game.”

“The streamer will launch three games developed by Klei Entertainment, coming exclusively to mobile for Netflix members: ‘Lab Rat,’ ‘Don’t Starve Together’ and ‘Rotwood,’” Variety reported Tuesday. “These titles join a growing slate of video games available at Netflix, including a batch of recently announced mobile games based on the streamer’s popular reality dating series, ‘Netflix Stories: Perfect Match,’ ‘Too Hot to Handle 3,’ ‘The Ultimatum: Choices,’ and ‘Netflix Stories: Selling Sunset.’”

A new game will come out each week in June, and two games will come out in July. The rest of the game’s dates haven’t been announced.

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