Amazon (AMZN) is planning to roll out ads on Prime Video, and it's likely to generate billions in extra revenue for the e-commerce giant, UBS US internet analyst Lloyd Walmsley said.
"We think conservatively it could add $3 billion [to Amazon's revenue] if they're just showing three minutes of ads every hour under the advertising community's current go-to-market," Walmsley told Yahoo Finance Live (video above).
"But if they actually increase those ads closer to six minutes an hour, then it could obviously double that," Walmsley added. "You're talking about $6 billion of potential revenue coming in through ads, and, by comparison, traditional linear TV is showing something like 16 minutes per hour of ads."
Amazon plans to roll out advertisements in its video streaming service in early 2024. The company said it aims to have "meaningfully fewer" ads than linear TV providers and other streaming services.
It also will offer an option to upgrade to an ad-free plan for $2.99. Currently, Amazon includes Prime Video as a part of its Prime membership, which costs $14.99 per month or $139 per year. A standalone Prime Video membership is $8.99 per month.
Even Walmsley's estimates may be understating the boost to Amazon's revenue.
"We think the impact of a global rollout is in the range of $6.6 billion to $8.0 billion of incremental revenue," Wedbush analyst Scott Devitt wrote on Sept. 24. "The ad-free offering ($2.99/month) represents a roughly 20% hike to the monthly Amazon Prime subscription price in the U.S. ($14.99), or a ~26% increase on the annual fee ($139)."
The company has needed to shift its approach to monetizing Prime for some time.
"We've seen, especially in markets like the US, that Prime adoption has slowed quite a bit," he told Yahoo Finance Live. "You've seen it in their subscription revenue line. I think they're now at the point where they can start to move the needle more on actually directly monetizing through ads."
Amazon is undoubtedly also eyeing the attractive margins for Prime Video advertising, according to Walmsley.
"The incremental margins on this are likely to be quite high for Amazon because, in many cases, they've already paid for the content," he said. "They either own it outright or they've licensed it to basically provide it to Prime users. So we don't think that there's a lot of incremental cost as they start to show ads and generate ad revenue."
Amazon stock is up 50% in 2023 to date.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Matthew Perry, the Emmy-nominated “Friends” star, has died at 54 years old. Warner Bros. Television Group, which produced the long-running sitcom that made Perry a star, issued a statement about his death Saturday. “Matthew was an incredibly gifted actor and an indelible part of the Warner Bros. Television Group family,” the company said.
The music industry is humming along nicely. Shareholders at Hipgnosis a London-listed song catalog fund that owns rights to tracks by Shakira, the Red Hot Chili Peppers and others, voted against giving the fund another five-year mandate at the company’s annual general meeting on Thursday. It is a blow to Hipgnosis’s founder and former music industry manager, Merck Mercuriadis.
Financial advisors should know what industry experts are dishing about. Here are five blogs to bookmark.
By turning to advertising revenue, streaming giants look increasingly like cable TVs.
The best way to grow your financial advisory business quickly is to amp up the 'know,' the 'like' and the 'trust' factors.
The company’s latest marketing campaign needed a song. It came from a throat-singing rock star in Siberia.
Michael Burry placed bearish bets against the S&P 500 and Nasdaq-100 in the second quarter.
The mortgage industry is notoriously feast or famine, but there’s no obvious way out of this bust, and many mortgage companies are growing desperate.
What will the 2024 housing market bring? We asked the experts.
Investors who chafe at having to take required minimum distributions (RMDs) each year have a new tool to help them reduce the tax bite of these withdrawals – and provide retirement income for life. A financial advisor can help you … Continue reading → The post New RMD Rules Let You Turn Charitable Donations Into Retirement Income for Life appeared first on SmartAsset Blog.
My wife and I bought long-term care policies 25 years ago when they were relatively cheap. Now, our premiums have increased for the third time to over $500 per month and will rise again in six years. I figure I’ve already paid about $72,000 in premiums. Now, in our late 70s, I’m trying to decide […] The post Ask an Advisor: Our Long-Term Care Insurance Now Costs $500 Per Month. We’re in Our Mid-70s and Have Paid $72k in Total. Should We Cancel Our Policies? appeared first on SmartReads by SmartA
Many regional banks say their troubled loans are on the rise as commercial borrowers show more signs of strain.
Microsoft, one of just two Magnificent Seven stocks to move higher last week, leads this watchlist of five Dow Jones stocks. near buy points.
Ryanair chief executive Michael O’Leary has urged Boeing to get its s— together as he threatened to abandon aircraft orders if the manufacturer does not deliver on time.
Another busy week for investors will be highlighted by central bank news and results from America's biggest public company.
Next week will be an eventful one, with earnings reports due from Apple, McDonald’s, Pfizer, AMD, Caterpillar, Stellantis, Qualcomm, PayPal, Airbnb, and Starbucks, among others. Central banks around the world, including the U.
Retired people need to stay busy and it never hurts to make extra cash, especially when you're on a fixed income. If you're thinking of working while retired, let's go over some of the best part-time jobs for retirees. Here are … Continue reading → The post 9 Best Part-Time Jobs for Retirees appeared first on SmartAsset Blog.
SOFI Technologies (SOFI) is likely to witness a year-over-year increase in earnings and revenues in the third quarter of 2023.
(Bloomberg) — Vast heaps of crushed brown rock hem the Indian Ocean at Western Australia’s Parker Point port — each a stockpile of 200,000 tons of iron ore, ready to be poured into a procession of bulk carriers bound for Asia’s steel mills.Most Read from BloombergIsrael Latest: Biden, Netanyahu Plan to Talk Within HoursCanada Plans College Crackdown Amid Foreign Student TroublesGM Hit With More Strikes While Stellantis Reaches Deal With UAWIsrael Warns of ‘Long’ War as Invasion of Gaza Strip Be
The market correction has intensified, with Apple earnings and a Fed meeting on tap. Microsoft leads four big techs with these bullish traits.
