Amazon Prime Video’s 2024 ad launch turned streaming on its head

The news: Amazon Prime Video’s ad-supported streaming rollout in January flipped the industry on its head, instantly creating a major video advertising player as major competitors like Disney and Netflix worked to build their own ad-supported audiences.

A recap: Prime Video debuted ads in January 2024, making it the default viewing method for Prime subscribers. Users looking to avoid ads were required to dish out an extra $2.99 monthly.

• We forecast that about 80% of Amazon’s 130.4 million US Prime Video viewers use its ad-supported tier, giving it an advertising audience of approximately 104.3 million. By comparison, Netflix recently said it has 70 million global monthly ad-supported viewers, and Disney CEO Bob Iger let slip that 37% of its US Disney+ subscribers and 30% worldwide use its ad-supported tier.
• Amazon’s entry into the market significantly lowered streaming CPMs (the cost to reach 1,000 viewers). Max, Netflix, Disney+ and others debuted on the advertising scene asking for record high CPMs in 2022, but Netflix lowered prices after Pirme’s ad launch, from $39 to $45 down to $29 to $35.

Zooming out: Amazon’s launch and large audience helped it secure $1.8 billion in upfront commitments this year, per The Information, a strong showing for its first upfront season. However, it has also spent the last two years introducing a glut of advertising features that have attracted further interest.

• Black Friday and the Cyber Five window was a crucial test for Prime Video’s shoppable advertising capabilities. Streaming and connected TV platforms spent much of 2024 launching shopping features, though Amazon has a leg up due to its merchant marketplace.
• Amazon sunsetted Freevee, its free, ad-supported streaming service, merging it with Prime Video to consolidate its streaming advertising offerings.
• Sports continues to be a major driver of ad spending for Prime Video. The company announced in September that it had secured 50 new advertisers for Thursday Night Football along with returning brands like Verizon and Allstate.

Our take: Prime Video’s advertising launch instantly created a top player in the streaming market. The increased competition it brings has caused CPMs to fall across streaming services, creating a lower-cost environment for advertisers.

With a major sports rights deal under its belt in Thursday Night Football and easy links to a leading ecommerce platform, Prime Video’s advertising business will define the pace of streaming and CTV ad innovation in 2025 and beyond.

This article is part of EMARKETER’s client-only subscription Briefings—daily newsletters authored by industry analysts who are experts in marketing, advertising, media, and tech trends. To help you finish 2024 strong and start 2025 off on the right foot, articles like this one—delivering the latest news and insights—are completely free through January 31, 2025. If you want to learn how to get insights like these delivered to your inbox every day and get access to our data-driven forecasts, reports, and industry benchmarks, schedule a demo with our sales team.