Amazon comes with plans for streaming subscription with advertising
It has been feared for some time: just a little while longer and streaming services, just like cable TV, will only become considerably more expensive. Netflix has a cheaper subscription available with advertisements in some countries (not in the Netherlands). HBO and Disney+ have similar options. Amazon Prime is now considering joining this list.
Amazon cuts its own streaming service
The plan to introduce a cheaper subscription with advertisements stems from cost-cutting measures that the company has taken in recent weeks, according to confidential sources from The Wall Street Journal. Tens of thousands of workers have been laid off. Of course, that concerns the entire company, not just the streaming service.
The fact that the booklet needs to be balanced, in all probability has something to do with the disappointing interest in The Rings of Power. It is difficult to calculate whether a film or series makes a profit for a streaming platform. Whereas with a cinema film you can simply cross off ticket sales against production and promotion costs, with a streaming service you cannot check which piece of media a new customer subscribes to.
No one really doubts that The Rings of Power cost more money than it generated. Bezos tapped $ 60 million per episode, while two-thirds of the customers have already left. Add to that the necessary rights for The Rings of Power, alone 250 million, and you end up with a total amount of 715 million for the first season. This makes it one of the most expensive shows ever. For reference, Season 1 of Game of Thrones cost a “reasonable” 60 million. A hefty bill, therefore, to have to rectify.
Amazon mainly wants to acquire more customers
Tapping off half a dozen streaming service subscriptions each month is pretty pricey, especially in this economy. So there are a lot of people hopping from service to service, while streaming services are mainly focused on keeping customers coming in as long as possible. Offering the option to have to deal with advertisements at a lower monthly rate is therefore, at least from the perspective of Amazon and the like, a logical move.
Advertising services are also eager to see the ever-widening range of streaming services with a subscription with advertisements. The younger generations hardly watch TV and the effect of marketing on social media appears to be disappointing. It is simply very easy to scroll past advertising, while platforms often count that as a ‘view’. As anyone who is reluctant to take out a Youtube Premium subscription (including this author) knows, if you are watching videos and an advertisement comes along, then you really have to deal with it for a while.
By cutting back on the company on the one hand and recruiting more customers for Amazon Prime on the other, the company hopes to be able to get a return on its recent investments. That is easier said than done. Last year, the company invested more than $ 7 billion in producing its own content and purchasing licenses. It’s a process that we’ve seen before, initially aiming for maximum growth and capturing as much market share as possible and then realizing that at some point you also have to start making money.
Want to stream ad-free content on Prime?
Abbo with advertising seems to have the future
In previous years, consumers seemed to have no problem paying a few euros more to get rid of advertisements. As mentioned earlier, it will have something to do with the skyrocketing cost of living. But more and more people seem willing to watch commercials if it means a cheaper subscription. At least that is the conclusion of a recent study.
Horizon Media’s Why Group report shows that ad-supported streaming subscriptions have increased seven-fold in the US this year. In addition, a third of the people who canceled a subscription gave the reason that they were switching to a cheaper subscription with advertisements.
For the time being, subscriptions without advertisements will remain the standard and subscriptions with advertisements will be the cheaper option. Yet it will not be the first time that options that were once standard are removed and then offered for an extra price. As soon as it is clear whether and how Amazon will implement the current plans and what this means for people who already have a Prime subscription, we will of course let you know!
