Commercials may be here to stay on streamers like Amazon unless you open

Ad-free entertainment used to be one of the big selling points of streaming services, but as more services including Amazon’s Prime Video add commercials, experts say the glory days of advertisement-free video content are gone.

That is, unless you open up your wallet to higher prices and additional monthly charges to avoid the advertisements that used to be banished to the realm of traditional, linear television.

Prime Video is the latest to make this change in Canada, adding commercials on Monday unless customers pay an extra $2.99 per month.

While the base price isn’t changing if customers accept the ads, the previous advertisement-free version of the service is more expensive.

Amazon has promised the advertisements will be “limited” but when contacted by CBC News, would not confirm how many ads would be put into programs or their length.

U.S. consumers started seeing ads on their Prime Video service in late January. That move followed similar changes by Netflix and Disney+ across North America, and Bell Media’s Crave in Canada.

WATCH | More ads on streaming services:

Amazon Prime Video won’t be ad-free much longer, unless you pay more

As of Monday, Amazon Prime Video will become the latest company to add commercials to its TV shows and movies — unless consumers are prepared to pay more.

Ads make lots of money

Industry players say the changing — and, often, plunging — financial realities for streaming companies may be to blame for these changes. While some services are not increasing the dollar value charged they are instead offering less.

“It’s very difficult in the streaming world to make money,” according to Bloomberg Intelligence media analyst Geetha Ranganathan, who says that “by far” Netflix is the only profitable streaming business.

“They’re getting more expensive because…  the unit economics of streaming is not as good as the old TV model.”

Back in August, Disney CEO Bob Iger said his company was deliberately pushing Disney+ clients toward the plans that include advertisements by making ad-free plans more expensive.

“We’re obviously trying with our pricing strategy to migrate more subs to the advertising-supported tier,” he said.

The Netflix logo is displayed at its corporate offices on September 25, 2023 in Los Angeles, California.
Netflix says its increased the number of subscribers in 2023, with 40 per cent of new subscribers opting for ads and a lower monthly fee. (Mario Tama/Getty Images)

Money from advertisements is going up with other players too. YouTube advertising revenue shot up by more than $1 billion US in the fourth quarter of 2023, compared to the same quarter the year before. 

And Netflix recently reported millions of new customers, 40 per cent of whom opted for advertising-included plans. That company also said its revenue in the last three months of 2023 was up by 12 per cent, again compared to the year before. 

Ranganathan expects Amazon will want to encourage more customers to stick with the advertisements on its platform, because it can make a lot of money from commercials without having to invest a lot…

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