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How Amazon Prime's ad-supported tier impacts competitors

With Amazon Prime Video (AMZN) offering an ad-supported version of its streaming service, its competitors' abilities to negotiate with advertisers have become potentially strained.

Yahoo Finance Senior Reporter Alexandra Canal joins Catalysts to break down trends in the current streaming landscape and what it means for consumers.

Catch Yahoo Finance's full interview with Disney (DIS) President of Global Advertising Rita Ferro from the Cannes Lions International Festival of Creativity. Keep up to date with all of Yahoo Finance's Cannes coverage.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

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This post was written by Nicholas Jacobino

Video transcript

Prime Video's ad supported pay structure strategy, first launched back in January, is having a major impact on competitors negotiations.

Amazon Driving down the price of ads across all streamers and networks for more, we want to bring in our very own Alexandra Canal and Ali.

What is what is, I guess, some of the trends that we're seeing within the ad space because of Amazon.

Well, there's a few things at play here.

One is the fact that we have those newer entrance in the ad supported space, I think Netflix, Disney Plus remember they only launched their ad supported tiers less than two years ago.

So already we're seeing this connected TV advertising landscape automatically starting to expand.

And then, in January, like you mentioned, we had Amazon roll out its prime advertising on its prime video service as the default option.

So you were automatically enrolled in those ads and at the time, MN and described it as quote.

A 500 gorilla enters the arena.

Now, six months later, we're starting to see that disruption begin to play out here, analyst Michael Nathanson.

He previously estimated that prime video could add over 50 billion to the C TV market in 2024.

And that amount is not only going to dwarf some of those smaller players, it's also going to increase inventory across the board, and as a result, that drives down prices.

And we're already seeing that play out with companies like Netflix.

The Wall Street Journal did report that Netflix is asking some brands to pay about 29 to $35 to reach 1000 viewers.

And that's a pretty will decrease from the 39 to $45 it charged last summer to some advertisers and one of the reasons there is because Amazon is charging a similar amount.

But we're seeing this increased scalability across the board, you find instead of a chance to speak with Disney about this, their global president of advertising, Rita Far I can.

She spoke a little bit about this big tech disruption, so I want to hear but more of what she has to say.

There's no question it's created a excess of supply in the marketplace.

For a marketer, you have to figure out where am I gonna spend my dollars?

What's the right partner to do that with and I think that's where the combination of creativity and technology really needs to really deliver on the outcomes.

Disney competes with Amazon, Google and everybody else.

And so you know, to me, the big the big share is still YouTube, right?

Like you, you just have to look at their earnings every quarter.

I think we we have done an extraordinary job because we have scale and we have premium storytelling and brands that everyone recognises.

So YouTube, Amazon.

A lot of those big tech names that we talk about it's impacting some of those more traditional players there.

Now Nathanson is forecasting that total advertising streaming will grow 33% this year.

That's a re acceleration from the 17% growth that we saw last year, so a lot of momentum building.

But the platforms that are going to fall behind are the ones that have the most inventory least must have content and worst targeting capabilities.

Those are the companies that are most at risk.

When you think of a a tech giant like Amazon, they have a great, uh, ability to target those consumers, so that's very attractive to those advertisers and definitely attractive when you consider all of the content opportunities with the sports ball of it all coming up as well.

The ecosystem, right?

I mean, Amazon does a great job of keeping consumers in their ecosystem.

I went to their upfront, so it was very impressive.

They had a lot of star power, so, you know, the It's a big competitor in the space.