Amazon Reportedly Plots Ad-Supported Tier For Prime Video

Amazon has no intention of slowing down its video streaming business, but to handle the ballooning production bills, the company is exploring an ad-supported tier of Prime Video. According to The Wall Street Journal, Amazon has held discussions internally about bringing ads to its streaming service, which is reportedly seen as a more lucrative pasture by its advertising partners.

One of the alleged plans is to push ads during video-watching sessions, while simultaneously offering a Prime Video tier that has zero ads but comes at a higher price. Right now, Amazon offers Prime Video as a freebie to every Prime member who pays $14.99 per month. On its own, Prime Video comes with a monthly subscription fee of $9.99 per account. 

Amazon is no stranger to ads. Its live sports segment already has ad telecasts, while its Freevee streaming service sustains itself primarily on ads while offering a catalog worth thousands of films and TV shows. Fire TV channels that were introduced in May offer both ad-free and ad-supported tiers. So far, Amazon has only held talks internally over the past few weeks but reportedly hasn't decided on how — and when — to inject ads into the Prime Video streaming experience.

Amazon isn't the only streaming platform that is dreaming about ad money from streaming. Netflix launched its own affordable ad-supported tier not long ago, serving the Basic With Ads plan at $6.99 per month, down from the regular plan that costs north of $15 each month. Disney+ also has an ad-supported subscription that costs $6.99 per month. Hulu, Discovery+, Paramount+, and HBO Max have all experimented with ad-supported tiers.

The primary goal of pushing ads is to absorb the cost of ambitious TV shows like "The Lord of the Rings: The Rings of Power" and "The Wheel of Time," both of which cost hundreds of millions of dollars to produce after securing their media rights. Of course, Amazon also needs the funds to make more high-end shows, as rivals like Netflix and Apple are increasingly making their presence felt on the film festival circuit and continue to rope in A-list actors for their streaming banners.

Another reason that Amazon may want an ad-supported tier for Prime Video is to cope with the recent structural reorganization which involved laying off over 18,000 employees in a single calendar year. However, these are said to be preliminary internal discussions and plans to offer an ad-supported class of Prime Video might also be nixed.