On January 29th, 2024, Prime Video added advertising for all video subscribers that didn’t opt to pay an extra $2.99 per month to retain ad free viewing. As expected, most (81%) users didn’t opt out of advertising. (Source: The TV Switching Study, March 2024). This approach is the opposite of Netflix who is growing from a fully ad-free subscriber base and working up to generating more than 10% of its total revenue from ads. Indeed, Amazon is the world’s largest advertiser, and this move instantly turned their massive TV audience into a new location for brands to reach shoppers.
The Future of Freevee
But there’s that little matter of the company’s Free-Ad-Supported Streaming Service, Freevee. With Prime Video now boasting an advertising tier, the industry is chattering about when Freevee will be shuttered. The question itself is much more complicated than it appears. Freevee has many layers, the most obvious being its linear and on-demand programming assets. But it’s largely the on-demand component being contemplated. Why and how would the company maintain a free ad-supported TV service when they can simply integrate that programming into the new ad-supported tier of Prime Video? Afterall, Prime Video is a service that most viewers already have due to Prime’s free shipping offering. And that’s the key, those without Prime can still tune in to Freevee, allowing audience development and ad sales among non-Prime members.
The Freevee to Prime Migration
For Prime subscribers, which is most U.S. households, the programming transition has begun. The chart below reflects Prime Video subscriber’s on-demand programming viewership. (Source: Subscription Video Track). These viewer’s overall Freevee engagement remains at levels comparable to that seen in the weeks leading up to the insertion of advertising into the Prime SVOD service. But when you look at Freevee’s #1 on-demand title, Judy Justice, you see a different pattern. There was a complete shift of viewership from Freevee to Prime Video SVOD and with that its audience doubled in size. Why? The show is now “available with Prime.”
What’s Next?
The programming strategy to date suggests that Freevee will likely live on for non-Prime members, a tool to maximize audience scale and potentially feed new members into Prime. Meanwhile, we’re monitoring the migration of Freevee content to “available with Prime.” If the Judy Justice trend is an indicator, this strategy has the potential to massively grow programming and advertising audience scale, a strategy at the core of Amazon’s DNA.