Last November, Netflix introduced an ad-supported tier in the US. With slower user growth and increasing competition, the streaming giant was looking for ways to boost revenues. This new model quickly gained traction among both users and advertisers, amassing 1 million users within just two months of its launch. Leveraging its rich audience data, Netflix will be able to effectively target customers and experiment with innovative formats like 'episodic' campaigns. Following Netflix's lead, Disney+ also introduced an ad-supported tier and now Amazon is joining the club. It launched ads on Prime Video last week, but with a twist. Instead of offering a cheaper ad-supported tier like Netflix and Disney+, Prime Video will incorporate ads into its existing service, and charging viewers extra for an ad-free experience. Despite the recent softness in the advertising sector, ad-supported video on demand (AVOD) continues to be one of the fastest growing area, projected to reach c.US$69bn by 2029, up from c.US$39bn in 2023. This potential has prompted streaming services to seek a share of this lucrative market and diversify their revenue streams beyond subscriptions. Another news related to Amazon this week is the FTC antitrust lawsuit. While this case will likely take time to unfold, as of now, Amazon has denied any wrongdoing and indicated legal actions against the allegations. In other news, Meta is launching a suite of AI-supported chatbots on its Instagram, Facebook and WhatsApp, and Spotify will partner with Roku to place ads in its CTV apps.
News of the week
Amazon introduces ads to Prime Video
Amazon has announced that it will start showing ads on Prime Video content starting early 2024. This move follows the footsteps of Disney+ and Netflix, which launched ad-supported tiers last year. The initial rollout will be in the U.S., U.K., Germany, and Canada, with other countries following later in the year. Current viewers will be automatically included in the ad offering without any change in price to their Amazon Prime memberships. However, for an ad-free experience, users will pay an additional fee of US$2.99 per month. Some content within Prime already has ads placed in, including the ‘Thursday Night Football’ broadcasts on Prime, livestream platform Twitch and CTV app Freevee, which also has a Prime Video interface. Despite this change, Amazon said that they aim to have ‘meaningfully fewer ads’ than competitors. Amazon Prime members will be notified via email about the addition of ads to Prime Video. The current cost of Amazon Prime is US$14.99 per month (US$8.99 with Prime video only) or US$139 per year.
Meta launches AI-powered chatbots
Meta is launching a series of AI chatbots on its platforms, including Instagram, Facebook and WhatsApp this week. These include an AI assistant with the capability to respond to user queries through a partnership with Bing as well as an AI image generator. Users also will have the opportunity to engage with 28 chatbots with the characteristics of celebrities who have consented to use their voice and image. Initially, the AI assistant and persona-based chatbots will be launched in beta mode in the US, with further releases planned in the coming weeks. Meta also announced that developers will have the option to create their own AI for use on Meta's messaging platforms. Finally, a feature to be released later in the coming year is a tool for those who cannot code, which will allow them to create their own bot.
FTC files antitrust lawsuit against Amazon
The Federal Trade Commission (FTC) has launched a 172-page complaint against google, accusing the e-commerce giant of monopolistic practices harming both shoppers and sellers. This is an expansive case which aims at the core of the business, including advertising. With its e-commerce business at the foundation, Amazon’s advertising has also grown significantly from US$31bn in 2021 to US$37.2bn last year, up from only US$1bn in 2025. FTC’s complaint details that Amazon takes about 50% from typical sellers that use their fulfilment services and that its search results are cluttered with ads and private label products making organic results and third-party products harder to find. FTC claims that Amazon's practices make advertisement ‘no longer a discretionary purchase but instead a necessary cost of doing business’. Amazon indicated that they intend to fight FTC’s allegations in court and that this lawsuit is ‘wrong on the facts and the law’.
Spotify partners with Roku to launch CTV video ads
Spotify will partner with Roku to launch video ads in its connected TV (CTV) apps. Currently, the streamer displays ads on devices such as mobile, tablets and desktop, and this partnership allows Spotify’s advertisers to reach its users that consume its content via CTV. Spotify will continue adding more partners to its network, Spotify CTV Partner Network, to build its CTV ad business. However, many people turn on Spotify on TV to listen to music without actively watching it, which could cause ineffectiveness of ads. Spotify is aware of this issue and said that ad contents need to be tailored for CTV, which have audio that stands on its own accompanied with appealing videos. Initially, Spotify will offer its Video Takeover product, which features interactive banners prompting user actions. Other formats such as video podcast ads will be added in the future. The company plans to alpha test the CTV video ads in the U.S. next month, with more markets to follow.
Other news
• Getty Images launches Generative AI image tool.
• Amazon gains court backing against EU antitrust regulator’s VLOP designation.
