Amazon's Prime Video streamer is poised to significantly outperform Netflix starting this week. No, it's not about the number of viewers, the size of the catalog or the quality of the originals. It has more to do with the fact that both streamers are starting an advertising business. At Netflix, adoption of its relatively new, ad-supported subscription tier has been relatively modest so far, with around 23 million users worldwide, while Prime Video is on pace to significantly exceed that number as of Monday.
Amazon's streamer will essentially flip a switch that turns all of Prime Video into an advertising layer – and, importantly, the only way around this is for the company's 115 million users to not see any ads want to pay a small fee on top of what they already pay to stream content like Reacher and The Boys. In contrast, Netflix has decided to offer an entirely new, separate and cheaper ad-supported tier.
What's more, not only will Prime Video's advertising business immediately take a huge leap over Netflix's starting January 29th, but the way each company got here reflects two very different schools of thought when it comes to the Monetization works. In other words, one group of users no longer has to pay for advertising, while the second group can pay less if they don't mind seeing ads while streaming content.
Two streaming giants, two very different approaches to starting an advertising business.
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As you can probably imagine, Netflix thinks Prime Video's move is the wrong approach. “We've thought about making it the default option,” Netflix co-CEO Greg Peters said during Netflix's recent quarterly presentation to analysts, acknowledging that the streaming giant had thought about going the same route as Prime to hit video.
“However, given our long history of no advertising, we thought it would be better for our members – rather than forcing them to switch and giving them advertising – to better attract them to those who wanted it, with the benefits that wanted it. “
In other words, a carrot versus stick approach. If you're okay with ads on Prime Video, you don't have to do anything (but you'll still pay the same price). However, if you're a Netflix subscriber who's okay with advertising, you can cut the monthly price of your Netflix subscription in about half.
Morfydd Clark as Galadriel in the Prime Video series The Lord of the Rings: The Rings of Power. Image source: Ben Rothstein/Prime Video
Learn more about Prime Video's ad launch: If you want to keep your Prime Video subscription ad-free, you will need to pay an additional $2.99/month.
Where can you register?: You can find a simple and quick registration process here.
How users react: Currently, some analysts believe that most Prime Video users won't bother proactively paying more to get rid of ads. However, at least anecdotally, this doesn't seem to be a popular move by Amazon.
One perspective here is that over the years Amazon has become comfortable charging you more for Prime, while at the same time delivery times are now all over the map (although this is largely a feature of third-party retailers that Amazon offers). does not control). And now users have to pay more on top of that to maintain their Prime Video status quo. “This makes a lot of people angry,” one Reddit user noted in a recent thread.
“They start to remember that their packages haven't been delivered for two days. That in general they probably don't even watch Prime that much (other than Thursday night football, but just going to a bar). And it just doesn’t add up.”
But hey; Business is business. “This Monday we'll find out what happens to an advertising market when a brand-new entrant with excess capacity, unrivaled first-party data advantages and massive, unduplicated reach decides to put a 'For Sale' sign in its storefront,” analysts at MoffettNathanson wrote in a Jan. 26 research note.