Amazon (AMZN) to Charge More for Ad-Free Content on Prime Video
Amazon AMZN is keeping no stone unturned to drive its momentum in the Prime program, which remains one of its key growth drivers. Currently, there are 200 million Prime subscribers worldwide, and recently, millions of customers were converted into loyal Prime subscribers.
In the past year, Amazon’s shares have returned 82.2% compared with the Zacks Retail-Wholesale sector’s rise of 2.5%.
The company recently revealed that Prime Video will start showing ads between movies and TV shows starting next month.
In this regard, Amazon recently partnered with IPG Mediabrands to connect brands with relevant audiences via Prime Video.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote
Amazon intends to run a minimal number of advertisements.
It is also set to introduce a higher-priced, ad-free version of Prime Video, which would cost $2.99 more per month.
With these efforts, the e-commerce giant strives to entice customers into the streaming market by offering them various streaming options.
Rising Competition
Amazon’s strong contenders in the streaming market — Netflix NFLX and Disney DIS — have already introduced their respective ad-based tiers.
Netflix is witnessing strong momentum with its ad-supported plan. Its cheaper, ad-supported tier now has 15 million monthly active users globally.
The company is also gearing up to reward binge-watchers with ad-free episodes. An ad-free episode will be offered to the users who will watch three episodes in a row.
Meanwhile, Disney unveiled its ad-supported Disney+ plan in December 2022 in the United States, with more than 100 advertisers. The ad-supported plan includes Disney+’s exclusive originals and library content.
The company is experiencing strong user base growth with its ad-supported plans. Reportedly, 50% of new subscribers chose the $7.99 per month plan over the pricier commercial-free one over the period from March to September 2023.
Furthermore, Disney is set to launch ad-supported Disney+ in select markets across Europe and Canada.
Apart from Netflix and Disney, Alphabet’s GOOGL Google is another notable player in the streaming industry, which is riding on the popularity of YouTube. The search giant offers ad-supported and ad-free versions of YouTube.
Growing Prime Video Efforts to Boost Prospects
Recently, Amazon added a new accessibility feature called “dialogue boost” to Prime Video, enabling users to increase the volume of dialogues without raising background music and effects. The feature is available across all devices that support the Prime Video experience and users can choose between different levels of dialogue boost based on their preference.
The company launched Prime Video Channels and the Prime Video Store in Chile and Colombia. It expanded Prime Video's international content portfolio with over 40 local Amazon Originals and live sporting events in order to strengthen its footprint in the global streaming market.
All these endeavors are expected to aid this Zacks Rank #1 (Strong Buy) company’s subscription revenues and, in turn, accelerate total revenue growth in the days ahead. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the fourth quarter of 2023, Amazon’s revenues are expected to be between $160 billion and $167 billion, indicating growth in the range of 7% to 12% year over year. The Zacks Consensus Estimate for Amazon’s revenues for the fourth quarter of fiscal 2023 is pegged at $166.12 billion, indicating a decline of 11.3% year over year.
The consensus estimate for 2023 revenues is pegged at $570.95 billion, indicating year-over-year growth of 11.1%. The consensus mark for earnings is pegged at $2.69 per share, unchanged over the past 30 days.
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