Ads May Be Here to Stay on Streamers Like Amazon, Unless You Open Your Wallet

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Ad-free entertainment was once a major selling point for streaming services, but as more services, including Amazon’s Prime Video, add ads, experts say the glory days of Ad-free video content is a thing of the past.

That is, unless you open your wallet to higher prices and extra monthly fees to avoid the ads that were once banned from the realm of traditional linear TV.

Prime Video is the latest to make the change in Canada, adding ads on Monday unless customers pay $2.99 ​​more per month.

Although the base price does not change if customers accept ads, the previous version of the ad-free service is more expensive.

Amazon promised that the ads would be “limit” but when contacted by CBC News, he did not confirm how many commercials would be included in the programs or their length.

U.S. consumers began seeing ads on their Prime Video service in late January. The move follows similar changes made by Netflix and Disney+ in North America, as well as Bell Media’s Crave in Canada.

WATCH | More announcements on streaming services:

Ads start on Amazon Prime Video on Monday

Starting Monday, Amazon Prime Video will become the latest company to add ads to its TV shows and movies — unless consumers are willing to pay more.

Ads make a lot of money

Industry players say the shifting — and often plunging — financial realities of streaming companies could be behind these changes. Although some services do not increase the monetary value charged, they instead offer less.

“It’s very difficult to make money in the streaming world,” according to Geetha Ranganathan, a media analyst at Bloomberg Intelligence, who says that “by far” Netflix is ​​the only profitable streaming business.

“They’re getting more and more expensive because…the unit economics of streaming aren’t as good as the old TV model.”

Last August, Disney CEO Bob Iger said his company was deliberately pushing Disney+ customers toward ad-included plans by making ad-free plans more expensive.

“We’re obviously trying, with our pricing strategy, to migrate more subscriptions to the ad-supported tier,” he said.

The Netflix logo is displayed at its offices on September 25, 2023 in Los Angeles, California.
Netflix claims to have increased subscriber numbers in 2023, with 40% of new subscribers opting for ads and lower monthly fees. (Mario Tama/Getty Images)

Money from ads also increases with other players. YouTube’s advertising revenue grew by more than US$1 billion during the 2000s. fourth quarter 2023compared to the same quarter of the previous year.

And Netflix recently reported millions of new customers, 40% of whom opted for plans that included advertising. That company also said its revenue in the last three months of 2023 was up 12%, again from the previous year.

Ranganathan expects Amazon to encourage more customers to stick with ads on its platform because it can make a lot of money from ads without having to invest much more.

“You look at the majority of their business, which is actually e-commerce…the (profit) margins on that business are 2 percent. The margins on advertising for Amazon are over 50 percent,” Ranganathan said.

Amazon already personalize advertisements for its customers. While the company hasn’t confirmed whether ads in Prime Video will be similarly targeted, advertising executive Mo Dezyanian says proper targeting will be part of what makes or breaks these types of ads.

A man with headphones sits in front of a window.
Advertising executive Mo Dezyanian says he thinks well-targeted ads will work well with customers, even though people often don’t like the ads. (CBC)

“People don’t like ads, but they really don’t like bad, irrelevant ads,” said Dezyanian, president of the Empathy ad agency in Toronto.

Dezyanian joked that “the most clicked ad on the Internet is the skip button on YouTube,” but he also said that audiences can also be very receptive to ads depending on timing and quality.

“If you give people the right ad at the right time, it’s actually a really good deal for people. The Super Bowl is a good example of that. Nobody likes commercials, but everyone watches commercials from Super Bowl,” he said.

Cancel now or shut up forever

As for customers who want to try to fight back? Now might be the time to do it, says a marketing and behavioral science expert.

“There’s a chance now. If everyone gets upset, maybe we could change this,” said David Hardisty of UBC’s Sauder School of Business in Vancouver.

Hardisty notes that Netflix itself has backtracked due to consumer backlash in the past. In 2011, it separated its DVD rental business from its online streaming business. The ensuing backlash – and plummeting stock prices – caused Netflix to reverse its decision a few weeks later.

However, the window may be short to make this kind of change when it comes to ads in streaming services. According to Hardisty, the rise or fall in subscriber numbers and revenue will be the deciding factor.

“Because this is something new, these companies are going to monitor the measures very closely. So now is the time, if you want to try to make a difference, to vote with your money,” he said. he declares.

A woman is photographed in front of a Bloomberg Intelligence sign.
Geetha Ranganathan, media analyst at Bloomberg Intelligence, expects Amazon to encourage more customers to stick with ads on its platform. (CBC)

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