Update (7:37PM CEST, 14 November, 2017): An Amazon spokesperson issued a statement saying the company isn’t pursuing its ad-supported Prime Video offering:
We have no plans to create a free, ad-supported version of Prime Video.
Our report from earlier in the day follows.
Ad Age reports that Amazon is prepping a free ad-supported version of its Prime Video streaming service, which could help it take on rivals like Netflix, Hulu and YouTube.
Prime Video is bundled with Amazon’s premium shipping service, which costs $99 a year or $10.99 a month in the US. It includes syndicated movies and TV shows, as well as original content produced by Amazon.
The move to offer a free tier could make a lot of sense, given that Amazon has multiple competitors battling to become the replacement of choice as more households ditch traditional cable services. As of this July, Amazon is believed to have 85 million customers signed up for its Prime service in the US; numbers from June indicate that Netflix has about 50 million subscribers there, while cable companies count about 48.6 million subscribers nationwide in total.
Netflix intends to grow its spend on production to a whopping $8 billion next year, in a bid to stock 50 percent of its catalog with original content. And in February, Google announced YouTube TV, a service to rival cable with plans starting at $35 a month and numerous channels on offer. In May, Hulu began offering 50 live channels for $40 a month. Even Facebook has been getting in on the game with its Watch service that delivers episodic content.
Meanwhile, Amazon has already begun experimenting in a limited capacity with ads (you can spot them in NFL games) and brand integrations on Prime Video. And as a business that’s growing to serve more international (and cost-conscious) markets like India, it makes sense to explore ways to serve up streaming media without a subscription fee.
The company is believed to have plans to share ad revenue as well as viewership data with partnered content creators. That could give it an edge over some rivals once the service is launched. At the same time, cable is far from dead, as a recent report shows that 18-34 year-olds in the US still watch 10 times more traditional TV on average than Netflix. This war is far from over.