Amazon is increasing the number of ads on Prime Video

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Amazon will run a larger number of ads for its blockbuster TV shows and movies on Prime Video next year as the US tech giant ramps up its push into ad-supported streaming services.

The company said it has not seen a sharp decline in subscribers since it introduced advertising on its Prime Video platform eight months ago, easing top executives’ fears of a customer backlash as the company tries to attract more brands for its streaming service.

Kelly Day, vice president of Prime Video International, which oversees the streaming video business in global markets, told the Financial Times that in 2025 there will be an increasing number of ad spaces for brands to target.

Ahead of his first London “up-front” on Wednesday night – when TV companies present their plans to advertisers to attract money next year – Day said his advertising “load” would “increase a bit further into 2025”.

Amazon has joined a highly competitive market for ad-supported streaming services. Most competing platforms, including Netflix, Max, Paramount+ and Disney+, have introduced an ad-supported tier at a lower price than ad-free subscriptions.

On Wednesday it will try to woo advertisers with new data showing it can reach around 19 million British viewers a month – almost a third of the population. Overall, Amazon said it has a global advertising reach of about 200 million — the average monthly potential viewers of ad-supported Prime Video — with more than half of that in the United States.

Day said that Prime Video intentionally launched earlier this year with a “very low advertising load” – for example, no commercial breaks in the middle of a program – which was a “soft entry into advertising that exceeded customer expectations for advertising performance.” what the advertising experience would be like”.

The e-commerce group has automatically switched its more than 200 million total subscribers worldwide to its ad-supported service unless they actively choose to pay more for the ad-free premium service.

Day said: “We know that it was a bit of a counterintuitive approach to do things from ourselves. But . . . It actually went a lot better than we expected.”

She said that “churn” – when customers leave the Prime service – was also “much, much lower than we expected.” . . We haven’t really seen that many people churn or cancel.”

Day declined to say how many customers paid more for their ad-free tier, but said the number was below the 20 percent figure estimated by some analysts.

Amazon will also introduce interactive and “shoppable” ad formats for Prime Video. Viewers can add an item to their cart or learn more about a brand by simply clicking on their remote control or scanning their mobile device without having to leave the shows on the streaming service. Rivals and analysts estimate that Amazon has a unique ability to convert advertising on its own retail platform into sales.

Ads have become a fast-growing and highly profitable source of revenue for Amazon in recent years. Digital advertising revenue rose by a fifth to $12.8 billion in the second quarter of 2024 compared to the previous year.

Some production companies have expressed concerns that streaming services have cut spending on new shows after initially gaining momentum in the battle for subscriber growth.

But Day said Amazon overall has increased spending on content for Prime, including more on live sports rights. She also confirmed plans for live coverage of the US election and said live sports such as the National Football League’s Thursday Night Football and events such as music would continue to be important.

Viewership is also up this year, she said, due to original content like Mr & Mrs Smith, Road House, Fallout And Rings of power. The next year she pointed to a strong number of new shows, such as the next series of Stand outand films starring Will Ferrell and Reese Witherspoon.