Technology AdGuard Blog: Is ad-free streaming doomed?

Gandalf_The_Grey

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Those of us who have been around for a while may remember the blissful old days when streaming was strongly associated with an ad-free experience. Sick and tired of the commercial breaks on cable TV (and let’s not even get started on linear TV), we would embrace streaming as a healthy alternative to the choiceless and ad-laden regular TV viewing.

Little did we know that this would not last forever… a paradise lost, likely never to be rediscovered. Slowly but surely, the old subscription-based streaming services introduced ad-supported tiers, while the new ones, like Discovery+ or Peacock, received ad-supported tiers right out of the gate.

Last year, it was time for streaming veteran Netflix to bow to the trend: Netflix introduced an ad-supported tier for $6.99 a month and, to rub salt in the wound, in July this year dropped its $9.99 ad-free basic plan in the US, the UK, and Canada, with its cheapest ad-free plan now costing $15.49 a month. We have already lamented the demise of the completely ad-free Netflix, which once promised to never introduce ads. You can read our detailed epitaph here. This time, the bell has tolled for Amazon Prime.
Prime Video is past its prime

This month, Amazon announced that its Prime Video streaming service will begin featuring ads in shows and movies in early 2024. The rollout will begin in the US, UK, Germany, and Canada, and later expand to France, Italy, Spain, Mexico, and Australia. In a press release, Amazon justified the introduction of a new ad-supported tier by citing the need to support the creation of “compelling content,” such as its hit series The Marvelous Mrs. Maisel.

Whatever the justification, the fact that Prime Video is turning to an ad-supported model is frustrating. And it’s not just a matter of seeing ads in places where there were none before. The other problem with any ad-supported service is that it collects a lot of viewers’ data in order to show them the most relevant ads. We do not know what kind of information Amazon will use to target ads in Prime Video, but we can assume that it will have a lot of data to work with, given the role that Amazon services play in the daily lives of the average American. For example, Amazon has 148 million Prime members in the US who use its various services such as streaming, retail, prescription drugs, grocery delivery, photo storage, and gaming. This means that Amazon can track and analyze their online behavior, preferences, purchases, and more. The sheer amount of data potentially available to advertisers means that they will be willing to pay a lot of money to reach these customers with personalized ads.

For Amazon Prime users who want to keep watching videos without ads, they will have to shell out an extra $2.99/month. That may sound like just a cup of coffee, but it’s actually a huge price hike. It means paying ~20% more for the monthly Prime subscription in the US (currently $14.99) or ~26% more for the annual one (currently $139).

This, along with the sneaky way that Amazon is rolling out the ad-supported option, suggests that the company’s real goal is to lure users into staying on the ad-infested tier, rather than a genuine offer to let them choose between ads and no ads.

But what is so sneaky about Amazon’s new hard-to-resist offer?
 

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