Amazon’s newest ad-dition: prime or peril?

As of February 5^th 2024, Amazon Prime Video subscribers would no longer enjoy an ad-free experience in their basic package – and media row kicked up as a result.

But will this translate into a mass subscriber-loss for Amazon Prime? Using data from BrandVue – Savanta’s market intelligence platform – we’ve traced movements in key brand metrics when competitors Netflix and Disney+ made similar changes, to anticipate what may happen with Amazon Prime.

Our data shows that Netflix saw an almost 1^st and 15^th. Similarly, after a two-week downturn, Positive Buzz was on the up again.

These trends suggest the likelihood of seeing similar declines with Amazon’s introduction of adverts. In fact, we might even see a sharp increase in Negative Buzz, as Amazon has chosen to introduce ads to subscriptions that previously had none. There is now an option to upgrade to premium ad-free services for an additional £3 per month, but Netflix and Disney+ introduced their ad-based tiers as a cheaper alternative, which did not affect incumbent subscribers.

How long-term will these effects be?

The impact of introducing ads is evident when it comes to conversation, but can these dips also influence more concrete brand metrics, like Consideration?

Our data shows a clear dip of 6 percentage points in Consideration for Amazon Prime Video in October 2023, which was when the inclusion of ads to Prime Video was first announced. Since then, Consideration has ticked back up to pre-announcement levels, but can we anticipate another dip now that ads have started to be shown?

Judging by the fate of Netflix and Disney+, the answer would appear to be no. Netflix saw no drops in Consideration in the months following the introduction of ads. In the case of Netflix, its biggest drops – in May and October – are more likely connected to controversies than the emergence of ads. Downturns in May likely stem from Netflix’s cracking down on password sharing – which sparked public outcry that month. Concerns about the treatment of contestants in Squid Game: The Challenge also arose in October, making it a likely reason for this decline in Consideration.

Disney+ announced plans to bring an ad-based subscription tier to the UK in August 2023, and while this did trigger a gradual decline in Consideration between August and November, there were no further declines once the ad-tier was introduced.

This comparison tells us that there may not be such a strong correlation between how consumers feel about ad-based subscriptions, and their willingness to stop using these brands. In fact, both Netflix and Disney+ reported increases in subscribers since introducing the ad-based tiers, with a mass of new subscribers choosing to be shown ads in exchange for a lower monthly fee.

It is, of course, worth remembering that unlike Netflix and Disney+, the Amazon Prime offer transcends TV and film; free next-day delivery, audiobooks, music, Prime Early Access – just to name a few.

So, is this a good omen for Amazon? It is difficult to say yes or no. Unlike Netflix and Disney, Amazon is not introducing a new, cheaper tier while leaving existing subscriptions untouched. What Amazon is doing, is incorporating ads where there were previously none, and charging a premium fee for those who wish to go ad-free.

This is a key difference as it is fundamentally changing the existing user experience. Will this actively drive away subscriptions, or will users accept ads as part of the Amazon Prime Video experience?

Thanks to BrandVue data, we will be able to see how many (if any) consumers start rejecting Amazon Prime Video. We will be able to see who these consumers are, their spending habits and much more. In May we will revisit this conversation to see what’s changed.

Another development to consider is that Netflix will fully phase out its ‘Basic’ ad-free plan, starting Q2 2024. Those that have been subscribed to Netflix since before July 2023 may have been paying for the ‘Basic’ plan (£6.99 p/m ad-free). Starting in April 2024, these users will need to choose between the £4.99 p/m ‘with ads’ or the £10.99 p/m ‘ad-free’ plan. When this happens, we may see a downturn for Netflix, like the one experienced when restrictions were placed on password sharing.

We’ll revisit the data in due course – but until then, we’ll be watching with interest…

…ad-free, of course.

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BrandVue is a market intelligence and decision-making platform, informed by the opinions and responses of over 100,000 consumers in the UK.

For more information about how BrandVue can help elevate your brand strategy, click here.