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Investing.com – Amazon (NASDAQ:) plans to launch an ad-supported class of Prime video streaming services as part of a move to boost growth in entertainment, the Wall Street Journal reported Wednesday, citing unnamed sources.
Plans to launch an ad-supported category for its own Prime video streaming service follows similar moves by competitors including Netflix (NASDAQ:) and Disney (NYSE::) as streaming platforms look for ways to shore up content spending amid an ongoing battle for dominance.
Meanwhile, Warner Bros Discovery (NASDAQ:) and Paramount (NASDAQ:) are said to be in talks with Amazon to add ad-based tiers to streaming services through Amazon Prime Video channels.
Warner Discovery and Paramount closed up 8.4% and 3.9%, respectively, following the news. Amazon shares fell 4.25%.
Bank of America analysts believe that the ad-supported tier makes sense for Prime Video.
“Amazon’s user data, existing relationships with retail advertisers, and heavy ad sales teams provide a competitive advantage for ad-stream monetization. Also, tiered rating may enable Amazon to increase fees on ad-free Prime tiers, which will follow recent fee increases for various Prime and 3P services.” ,” they wrote in the client’s note.
Analysts also expect Amazon to continue to rely on video content in exchange for drawbacks in an effort to drive usage.
Additional reporting by Sinad Karametović