Amazon planning ad-supported tier for Prime Video: Report

Amazon Prime Video is considering an ad tier streaming service, according to a report from the Wall Street Journal. Yahoo Finance Live discusses what it could mean for the streaming industry.

Video transcript

- According to the "Wall Street Journal," the company is reportedly planning an ad-supported tier for Prime Video. This will complement its current prime streaming plans, which cost 15 bucks, if you are a Prime member, 8.99 as a standalone service. The company already has a free ad-supported service, or fast service, called Freevee, and that really gained a lot of brand recognition after the release of "Jury Duty," which I was a big fan of. Everyone, tune in if you haven't seen that.

But it just goes to this story of all these companies trying to find that profitability. And to me, this was sort of surprising since you think of Amazon, Apple, these big tech giants, they have all this money that they wouldn't necessarily be concerned about this, but even they are exploring different types of options right now.

- You figure, why not add an extra lever, right? Because if the competitors are doing it, that means that you're becoming a little more accustomed to having those ads. I personally still can't do that. I have tried. But why not have an extra source of revenue?

- And you're building out that sports arm, potentially, too, right, and ads is such a big part of that, with what they're doing with the NFL. And so to be able to do that. I also think just ads are part of what Amazon is used to doing.

You go on Shop on Amazon, and even though you're a Prime member, you still get banner ads up on Amazon. And Amazon is very good at that part of their business. So not totally surprised, at least from my end, to see that. I am curious to see where they go with it, in the sense of ads.

We were just talking about CNN. Not saying that they're going to buy a spin-off of CNN, but do you start getting news then too on Amazon? Like what other content are they looking to pair with the ads? I mentioned sports, but you would think some kind of, maybe, live news element, or something else that does have traditional ads. Would be interesting to see if they start incorporating that kind of content too.

- Yeah, and it's also interesting, you brought up the sports aspect of it. Because that would almost be more consistency than across their video offerings, right. They already have viewers who are used to seeing ads when it comes to their sports offerings, their partnership there with the NFL. So more consistency there.

And also just, overall, taking a step back as to why they wouldn't. It seems like a relatively easy feat in order for them to accomplish. And Netflix and Disney, as it seems like so far, the feedback from the street, is that they are very successful in converting some of their user people who weren't signing up for their own accounts, now that they are doing the password crackdown-- many of those users are signing up for that ad tier.

So they're able to get more and more, especially in this economic environment, inflation, people pulling back on spending. Some of those cheaper options, although, this ad tier here, could be a smart move then.

- And it's the part that comes with Prime, right? It comes with like a traditional Prime membership. Because then I think it's really a good pitch. If it's my traditional online prime membership, and then I get the ad supported tier with it, but I would have to pay more to not get the ads, it's easier to then make more money off me who was previously getting premium content without paying more, right?

- Also with a lot of competition in the space right now, the Netflix password sharing crackdown. I know I'm probably going to have to, unfortunately, pay for my own subscription soon in order to watch "Never Have I Ever," which comes out June 8th, that is something that, I think, people want, right. That flexibility of choice.

And I've spoken with a lot of experts in this space who say advertising is the next frontier in the streaming wars. Not only because of the competition, but also because of the ability to capture ads from broadcast television, which we know has been on that decline. So something to continue--

- I do it for Hulu, and it's not that bad. I don't do it-- I haven't opted for it for Disney Plus or for Netflix yet, but Hulu. And you get used to it pretty quickly.

- I tried that thing where the ads start and I just walk away. And I try to get something done just real quick-- real quick.

- I can't--

- Microwaving something.

- Creating one dish.

- 30 seconds has never felt so long. That's what it feels like when you're watching an ad.

- There you go.