No backlash from Amazon Prime Video’s ad-supported move, Hub survey notes

According to new findings from Hub Entertainment Research’s quarterly “TV Churn Tracker,” Amazon Prime Video’s recent launch of an ad-supported tier as the default service has significantly impacted the streaming advertising ecosystem.

The report, based on a survey of 6,338 US consumers aged 16-74 who watch at least one hour of TV per week, was conducted from January through March 2024.

The study finds that a substantial number of TV viewers have shifted from watching ad-free content exclusively to viewing ad-supported video following Amazon Prime Video’s introduction of ads at the end of January 2024.

The proportion of consumers using only ad-supported services increased by ten percent compared to the fourth quarter of 2023, while the group watching only ad-free content decreased by nine percent.

By defaulting viewers to the ad-supported service, Amazon Prime Video has quickly become the leader in share of ad-supported subscriptions. Historically, streaming services that launched with an ad-supported tier have had the highest level of subscribers accepting ads, while services that either introduced a new ad-supported subscription or defaulted consumers to the ad-free option had the lowest level of accepting subscribers. Amazon has immediately risen to the top, with more than eight in ten subscribers now using the ad-supported service.

Notably, there has been no evidence of a backlash resulting from placing subscribers on an ad-supported tier.

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Amazon Prime Video’s decision to default tens of millions of subscribers into the ad-supported service had no measurable effect on either Amazon’s subscription levels or the overall rate of SVOD subscriptions. Similarly, AMC+, another recent entrant into ad-supported streaming, saw no impact on their overall subscription rates.

The findings suggest that viewers are increasingly accepting of advertising in streaming video, and Amazon has capitalized on this trend. By requiring subscribers to opt out and pay a higher monthly fee for ad-free viewing, Amazon Prime Video has successfully encouraged the vast majority of subscribers to remain on the ad-supported service, resulting in the highest proportion of viewers watching ads among streaming services.

“Virtually overnight, Amazon Prime Video dramatically transformed the video advertising ecosystem,” said Mark Loughney, Senior Consultant to Hub. “Suddenly advertisers have the ability to reach tens of millions of viewers on one platform, with robust targeting capabilities and a vast retail capability. Amazon has immediately launched themselves into ‘must buy’ territory for advertisers and media agencies.”

Amazon also owns Freevee, a free ad-supported streaming television platform which industry watchers assume will eventually be folded into Prime Video, instead of being offered as a standalone product.