Amazon.com Inc AMZN CEO Andy Jassy on Thursday stated that the company’s streaming service, Prime Video, will have “meaningfully fewer ads” than its competitors.
What Happened: During Amazon’s second-quarter earnings call, Jassy highlighted that while advertising is a standard part of streaming video, they plan to diverge from this norm.
“While ads have become a norm of streaming video, we aim to have meaningfully fewer ads than linear TV and other streaming TV providers,” he said.
The company’s ad tech and measurement capabilities allow brands to directly connect their advertising to business outcomes, such as product sales or subscription sign-ups.
This approach, Jassy believes, will enhance the relevance and performance of ads on Prime Video. For customers who prefer an ad-free experience, Amazon offers this option for an additional $2.99 per month.
Amazon CFO, Brian T Olsavsky, also spoke about how advertising remains a significant contributor to profitability in both the North American and international segments.
He also noted the company’s plans to expand its offerings in areas driving growth, including sponsored products and Prime Video ads.
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Why It Matters: Amazon’s decision to reduce ads on Prime Video comes after the company undercut Netflix Inc. on advertising pricing to attract marketers’ attention.
The e-commerce giant introduced advertising to its Prime Video platform five months ago and has been presenting its plans to advertisers to attract money for the next year.
The introduction of an ad-supported version of Prime Video disrupted the streaming ad market, causing a significant decrease in ad prices for everyone, including Netflix, YouTube, and TV networks.
This move impacted the negotiations these platforms are having with advertisers for the upcoming TV season.
Meanwhile, on Thursday, Amazon announced second-quarter net sales of $148 billion, a 10% increase year-over-year, but fell short of the Street consensus estimate of $148.56 billion, according to data from Benzinga Pro.
Price Action: At the time of writing, Amazon shares had fallen 8.15% to $169.06 during the pre-market trading session, after closing at $184.07 on Thursday, down by 1.56%.
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