Amazon bets on ads to compete in India’s streaming race

Amazon is gearing up to introduce ads to Prime Video in India next year, as it looks to capitalize on the growing acceptance of ads in streaming. The shift toward ads is intended to bolster investment in premium content as the company jostles for position in one of the world’s most competitive streaming and advertising markets.

Joining the ranks of Disney+ Hotstar and local giant JioCinema, which already serve ads, Prime Video is playing catch-up. Meanwhile, Netflix, another top player, has held out on ads but may follow suit soon as its ad-supported tier gains traction worldwide.

Amazon’s strategy is to show “meaningfully fewer” ads than traditional TV and other streaming platforms while offering an ad-free version at a later date.

“This move is poised to open up additional premium ad inventory across both mobile and CTV,” says Yatin Balyan, managing partner of media investments at Omnicom Media Group India. “For media buyers and planners, this development presents a valuable opportunity to access high-quality inventory alongside other OTT services, allowing for more strategic campaign planning and deployment, especially for premium brands.”

Prime Video’s move further affirms the grip that streaming platforms have on Indian audiences. We already know that hyperlocal content and annual sports extravaganzas like the Indian Premier League (IPL) — India’s top cricket tournament — continue to engage hundreds of millions of people daily. JioCinema and Disney+ Hotstar led the pack in ad revenue in the first half of 2024 by leveraging the IPL and the International Cricket Council World Cup.

Driven by advertising and subscriptions, India’s premium video-on-demand industry reportedly generated over $1 billion in revenue in the first half of 2024, according to Media Partners Asia (MPA). This is a jump from the $760 million seen in the same period last year.

Currently, Prime Video has a roughly 23% share of the streaming market — estimated to be about 20 million users in India. This is a close second to Disney+ Hotstar, which holds about 26%.

However, things may soon change with the approval of Disney’s mega $8.5 billion merger with JioCinema, which only has 7% market share at the moment. Market analysts predict the merger will consolidate the highly competitive streaming landscape and potentially take an over-40% share of the country’s TV advertising spend.

As CTV becomes more popular in India, ad-supported platforms like Prime Video may present an opportunity to capture more premium audiences in one of the world’s fastest-growing consumer markets.

“The major consumption of Prime Video is predominantly concentrated in metro cities, where superior broadband connectivity and higher smart TV and CTV penetration drive viewership. This expanded ad supply allows brands to tap into premium quality inventory on the big screen, engaging a highly attentive audience,” adds Balyan.