Amazon Challenges Netflix with Cheaper Ad Slots, Boosts Prime Video Ads: Report

Amazon.Com Inc's AMZN Prime Video is undercutting rival Netflix Inc NFLX on advertising pricing as it battles for marketers' attention.

Amazon introduced advertising to its Prime Video platform five months ago and is going through its first "up front," when television companies present their plans to advertisers to attract money for the next year, the Financial Times reports.

Many rival platforms, including Netflix, Max, Paramount+, and Walt Disney Co DIS Disney+, have introduced ad-supported tiers at lower prices than their ad-free subscriptions.

Also Read: Disney Develops Tech to Rival Netflix and Boost Streaming Profits: Report

Analysts expect Apple Inc AAPL to bring ads to its TV+ service soon.

Advertisers purchase "bundles" in various formats, making direct comparisons difficult. However, multiple executives and advertising leaders told the FT that Amazon is pricing its ad slots more cheaply than Netflix but higher than others like Disney.

The entry of Amazon has forced competitors to lower their prices, the FT cited advertising sources.

The e-commerce giant automatically converted over 200 million global subscribers to the ad tier unless they opted to pay more for the premium ad-free service.

Citi estimated in January that Prime Video adverts could generate over $5 billion in "high-margin advertising revenue" as it expands.

In the second quarter of 2024, Amazon Prime Video and Netflix led the U.S. subscription video-on-demand (SVOD) market, each holding a 22% share, as per Statista.

A recent report indicated that Apple is refining its strategy in Hollywood after spending over $20 billion on original TV shows and movies that have yet to attract large audiences.

Apple's streaming service captures only 0.2% of TV viewing in the U.S. This is significantly lower than competitors like Netflix, which sees more monthly views than Apple does in a day.

Apple plans to make its streaming business more sustainable by paying less upfront for shows and canceling underperforming series faster.

Price Action: AMZN shares are trading higher by 0.45% at $184.03 at the last check on Tuesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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