• by Wayne Friedman , January 26, 2024

Amazon Prime Video's ad-supported service, which will be launched on January 29, is now forecast to pull in an estimated $1 billion in its first year in operation, according to MoffettNathanson Research.

This will reach $1.75 billion in 2025, $2.26 billion in 2026 and $2.76 billion in 2027.

The research reiterated Amazon's statement that it will have “meaningfully fewer ads than linear TV and other streaming providers.” 

Michael Morton, media analyst at MoffettNathanson, projects this will mean four minutes of commercial time per hour -- eight 30-second commercial messages. 

Its estimates come from a projected $32.50 CPM -- the cost per thousand viewers -- lower than Netflix's low $40 level.

“We expect sell-out rates to be relatively low at the start given the newness of the platform and that inventory will only be sold through the scatter market -- we are using 60% as our initial 2024 estimate.” Morton adds: "These levels will rise -- 85% for 2025 and 90% by 2027."

At the same time, it expects about 15% of the U.S. Amazon Prime subscribers will opt to pay a $2.99 a month extra for its continued no-ad option. That will bring in another $400 million. The total boost from these moves will amount to $1.4 billion from the U.S. by the end of 2024.

Internationally, Amazon is estimated to see $300 million in ad revenue and $100 million in incremental subscriber revenue in its first year in operation.

This is in addition to Amazon FreeVee, which is similar to other FAST (Free Advertising Supported Television) channels such as Tubi and Pluto TV, projected to bring in $1.7 billion in 2025, as well as $600 million from “Thursday Night Football.”

Taking in all these Amazon streaming/digital video platforms will bring Amazon to $4 billion a year, followed by Hulu at $3 billion, Peacock with $2.3 billion) and Roku at $1.9 billion).

“We forecast Amazon and Disney being neck and neck for the largest drivers of [total] AVOD ad revenue,” Morton says.

The entire U.S. market for all these video platforms will total $16 billion.

In a broader outlook, MoffettNathanson estimates there are currently 70 million Prime Video subscribers, viewing 0.3 hours of content a day.