Amazon Denies Rumored Plans for Ad-Supported Prime Video Service

Amazon has denied a report that it has been working on a free, ad-supported video platform to complement its subscription-based Amazon Prime Video service.

Amazon has been in talks with various television networks, movie studios and other media entities about providing content to the site, according to the report, published Monday in Ad Age.

Such a service would place Amazon in direct competition with Apple and other streaming video services for original content, which has become an important way for a new service to gain market share.

Amazon has “no plans to create a free, ad-supported version of Prime Video,” spokesperson Cat Kelty told the E-Commerce Times.

Apple earlier this year launched a US$1 billion effort to develop original content for its service. It hired two former Sony executives, Jamie Erlicht and Zach Van Amburg, to lead the company’s global video content efforts.

Perhaps coincidentally, Amazon on Monday announced that it had inked a multiyear deal for the television rights to The Lord of the Rings. A Prime Original based on the J.R.R. Tolkien novels will be produced by Amazon Studios in cooperation with the Tolkien Estate and Trust, HarperCollins and New Line Cinema.

Support for Ad-Supported Content

Over-the-top viewing remains a powerful medium in terms of engagement with advertisers, according to a report the Interactive Advertising Bureau released Monday. After linear television, more viewers watch OTT programming than any other.

Fifty-six percent of those co-viewing OTT programming said they regularly talk about the brands they see while watching television.

“Content really drives engagement,” noted Chris Kuist, senior vice president for research and impact at IAB.

“There’s great content across all the different kinds of content,” he told the E-Commerce Times, “however they’re monetized.”

OTT co-viewers spend more than double the amount of time watching ad-supported content than they do watching subscription services without ads, the report also indicates.

Dual Platforms

“This seems to be the direction that many companies are going — two versions of the same service,” said Jeff Kagan, an independent analyst.

“One is paid by the customer and they bypass the ads. The other is the free version where customers get access but watch the ads,” he told the E-Commerce Times

Services like this currently are offered on a number of video and radio platforms, including YouTube, TuneIn Radio and iHeart Radio, Kagan noted.

Original video content has become such an important component of online video that the top social media sites have undertaken their own efforts to develop original programming, ranging from exclusive news and sports shows to original talk shows, news and comedy.

Twitter, for example, earlier this year announced plans to launch a new streaming news service from Bloomberg, along with several new talk shows and other original programming.

Facebook reportedly has committed up to $1 billion to develop a new video programming platform called “Watch.”

“Just as Facebook wants you to spend more time on the platform, Amazon wants you to buy ever more stuff — or in this case, monetize their huge customer base to advertisers,” said Rick Edmonds, media business analyst at Poynter.

That’s a reasonable assumption, he told the E-Commerce Times, although he noted that he had no inside information to corroborate the report.

Consumers in the streaming and on-demand video market are spread out in terms of preferring to pay for content versus their willingness to watch advertising, so it makes sense for Amazon to offer both types of services, suggested Mike Vorhaus, president of Magid.

The competition among the new streaming video and video on-demand services is fierce, with a number of rival services from Netflix, SlingTV, YouTube, Hulu, DirecTV Now and PlayStation Vue, among others.

“Amazon seems to be doing pretty well in terms of competing with those services, particularly Hulu,” Vorhaus told the E-Commerce Times. “This should add users for them, and help them gain in terms of their position with Netflix.”

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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