Amazon is exploring the launch of an ad-supported plan for its Prime Video streaming service, following a trend led by other rival outlets looking to boost revenue by adding commercials to their offerings.
The ecommerce giant is considering running ads against its programming while offering customers the option to pay more to watch the shows commercial-free and with other features, according to the Wall Street Journal, citing anonymous sources. No decision has been made on an ad-supported tier, the Journal said.
Amazon declined to comment.
If it goes through with the plan, Prime Video, known for shows including “The Marvelous Mrs. Maisel,” would join a long list of streaming companies that offer ad-supported options to attract subscribers and retain existing customers.
Last year, Netflix launched a cheaper plan with ads, after years of being adverse to advertising on its platform. Disney+ also began offering a plan with commercials, while increasing the price of its standard tier without ads.
Amazon has a free, ad-supported streaming service called Amazon Freevee, but Freevee does not contain all the premium content that is on Prime Video. Freevee’s originals include the courtroom prank comedy “Jury Duty.”
Advertising is an area of growth for Amazon. The tech giant generated $9.5 billion in advertising services during the first quarter, up 21% from a year earlier.
Rob Enderle, a principal analyst at advisory services firm Enderle Group, called the potential ad-supported streaming tier an “additive revenue opportunity.”
“They’re going after an audience that doesn’t want to spend as much money for streaming and appears willing to watch ads,” Enderle said. “They want to get that ad revenue as opposed to having to go to somebody else.”
Additional revenue would help the company pay for its programming. Amazon spent more than $700 million for the first season of “The Lord of the Rings: The Rings of Power,” including buying the TV rights, according to people familiar with the situation.
(Los Angeles Times staff writer Meg James contributed to this report.)