Unauthoritative Pronouncements

Yesterday people seem to be completely shocked by the email they received from Amazon that Prime Video was going to include ads by default, unless subscribers paid an additional sum. This news was from months ago, and I mentioned it here on this blog too.

It’s a bummer, but what are you really going to do about it?

I’m not on Amazon’s side here at all, but realistically what are you going to do about it?

Nothing!

I know you. I am you. We are one.

We’ve put Amazon in a position where it is integral to how most of us live our lives. Amazon Prime shipping can’t be beat, and there are all the other ancillary benefits.

Prime Video is one of those ancillary benefits. It was a nice-to-have, and it still is. The only move you have to protest Prime Video’s inclusion of ads, is to cancel Prime (you won’t do that) or to stop using Prime Video “to send a message” (they don’t care).

No, this is not merely because The Rings of Power is expensive, or because Citadel flopped. Those shows never had the burden of needing to be profitable because that’s not how Amazon earns money. They didn’t even have to worry about subscriber growth because their shows were never driving subscriptions. Amazon is a retailer.

People are still completely oblivious to why any of the subscription fees are going up. They were too low. They were financed by investors that prioritized growth, when investment money was basically free.

Then investors wanted profit, not growth — The Netflix Correction — now it’s about generating money. So Prime Video, which was run as some “do whatever” business that basically amounted to brand advertising, and did weird stuff like buy MGM for way more than The Rings of Power and Citadel cost, now has to turn a profit.

Ads, ads as far as the eye can see.

The interfaces are already stuffed with them, which was the point of my blog post back in October. Janko Roettgers interviewed Amazon’s director of Fire TV advertising, monetization and engagement Charlotte Maines and the ads will basically continue until they see some kind of financial penalty. And for Prime Video, since this is all overhead being traded for ad-supported, would have to be a big, big shift. Mass cancellations. Dogs and cats living together.

There won’t be mass cancellations of Prime over ads in Prime Video because it is too integral to your life. You can’t shame Amazon into anything.

Also, people seem to have this opinion that other companies don’t have ads, so Amazon is a second-rate streamer (whatever that means), but they all have ad-supported tiers, except Apple TV+, and that’s just a matter of time. Apple is unlikely to switch people enrolled in Apple TV+ to the ad-tier, instead opting to add the ad-supported tier as a new option, but when they do they’ll very likely raise the rate on the ad-free tier, like many other services have done.

Julia Alexander wrote about it being opt-in vs. opt-out back in October:

Two different approaches are playing out as streamers add advertisers: opt-in and opt-out. Netflix is in the former camp, creating a separate, cheaper tier that’s different from its core subscriber base. The goal isn’t to move its foundational base to an ad-supported tier but rather to continue scaling by bringing in more price-conscious and less invested customers through a cheaper product. This is a strategy focused on customer acquisition.

Amazon has all the leverage here. Your option is to give them the same, or more money, since you realistically won’t cancel. They don’t have to entice you to a lower tier, or drop prices, or raise Prime overall.

Sure, over time, these things can have a cumulative effect that might cause cancellations, but Prime can course correct. To that end, all of these fees are easier to adjust on the fly than the overall Prime rate (like when Amazon Fresh increased their “free delivery” to $150 in February of 2023 and dropped it back to $100 in October of 2023 because the hike seemingly didn’t work).

Remember that Prime is the ultimate bundle, and that not every other company is in this position. Increasing the cost of the overall bundle is going to cause actual cancellations, increasing the cost of the unprofitable parts of the bundle is an effective strategy.

Whine and kick and scream, of course, but you’re trying to make a logistics center feel ashamed. Good luck.

Thanks to how they account for things we’ll never be able to make it unprofitable for them - because it was always unprofitable. There’s nowhere to go but up, to ads, and profit.