In his annual letter to shareholders, published today (April 11), Amazon (AMZN) CEO Andy Jassy said the e-commerce giant’s video streaming service, Amazon Prime Video, “can be a large and profitable business on its own.” Amazon recently made a significant change to Prime Video by introducing ads in between shows and movies to users with a basic Prime subscription. As part of the change, prime members who want an ad-free content experience now have to pay $3 extra per month.
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“Streaming TV advertising is growing quickly and off to a strong start,” Jassy said in his annual letter. He boasted that the advertising expansion has helped brands reach over 200 million monthly viewers on Prime Video.
Last year, ad revenue at Amazon, primarily driven by sponsored ads on Amazon.com, rose 24 percent to $47 billion from the previous year, according to the letter. This was prior to the launch of ads to Prime Video in January, so total ad revenue is expected to grow even faster this year. Some analysts have predicted that ads on Prime Video could generate more than $3 billion in revenue in 2024.
Aside from the advertising push, Jassy also shouted out exclusive content on Prime Video that he believed is propelling the streaming service, such as Thursday Night Football and Lord of the Rings. He said that his confidence in Prime Video being a profitable business is “buoyed” by its compelling content selection and “customers’ engagement with this content.”
Another growing area is Amazon’s exclusive contracts with top content creators. In March, YouTube superstar MrBeast signed a deal with Prime Video to launch a TV show called Beast Games, expected to release later this year. The deal is estimated to be worth as much as $100 million.
Jassy, 56, was appointed Amazon’s CEO in January 2021, succeeding founder Jeff Bezos. Today’s shareholder letter is his third as CEO.
