Amazon Prime Video’s ad push may garner over $3B in 2024

Starting Monday, many of Amazon‘s Prime Video users will see something they’ve never seen before: commercials in TV shows and movies.

Amazon will begin serving ads in Prime Video content by default in major markets Jan. 29, unless users opt to pay extra ($2.99/month in the U.S.) to have an ad-free experience. The company promises to have “meaningfully fewer ads than linear TV and other streaming TV providers” and will first launch ads in the U.S., U.K., Germany, and Canada, to be followed by France, Italy, Spain, Mexico and Australia later in the year.

The results? Amazon will hit the ground running in a massive way.

Morgan Stanley forecasts Prime Video ads will generate $3.3 billion in revenue in 2024 worldwide, growing to $5.2 billion in ’25 and $7.1 billion in ’26. The initiative should tack on nearly $2.3 billion in annual earnings before interest, taxes, depreciation and amortization (EBITDA) in 2024, per the Wall Street firm’s current forecast.

Analyst firm MoffettNathanson has more conservative expectations — but still believes Amazon’s move will be seismic. The firm’s analysts peg revenue from Prime Video ads at $1.3 billion in 2024, rising to $2.3 billion next year. But that’s not all: The ecommerce company stands to pull in an incremental $500 million per year in ’24 and ’25 from Prime members who want to avoid seeing ads, per the analysts’ models.

“This Monday, we are going to find out what happens to an advertising market when a brand-new entrant with excess capacity, unrivaled first-party data advantages and massive unduplicated reach decides to put a ‘for sale’ sign in its window,” MoffettNathanson analysts led by Michael Morton wrote in a Jan. 26 research note.

Amazon is poised to steal share from cable networks and ad-supported VOD players, the MoffettNathanson team predicts: “[W]e strongly believe that Amazon’s decision to add advertising to Prime Video will be a disruptive force to commoditized AVOD players, siloed CTV platforms and non-top 20 linear cable networks,” the analysts wrote.

At the Variety Entertainment Summit at CES 2024, Alexys Coronel, head of U.S. entertainment and telecommunications for Amazon Ads, talked about the coming launch of ads in Prime Video, which she said will be able to reach 115 million unique viewers in the U.S. alone.

“That’s incredible for us. It’s a huge untapped resource,” she said, adding, “It’s a huge step change for us.”

The addition of streaming-video inventory on Prime Video promises to give a jolt to Amazon’s already massive market share in digital ads. In the third quarter of 2023, the tech company reported ad revenue of $12.06 billion — up 26% year over year, as it touted strong viewership from the NFL’s “Thursday Night Football” games exclusively on Prime Video U.S. Variety