Amazon Closing In On Ad-Based OTT Service: Report

Amazon is preparing to launch a new ad-supported video streaming service “early next year” that will operate separately from Amazon Prime, a subscription-based service that features a large OTT library, theNew York Postreported Friday.

The Wall Street Journalreported in March that Amazon was considering an ad-supported video and music streaming service, but today’s report suggests  that Amazon is closing in on a launch. 

Amazon has implemented some advertising into the Amazon Instant Video service, but has not outlined any plans for something beyond that.

“We currently offer the first episode of some television shows free with ads through our First Episode Free feature on Amazon Instant Video, and there are display ads on some short videos such as movie and game trailers,” an Amazon spokeswoman said in an emailed statement. “We’re often experimenting with new offers and experiences for customers, but we have not announced any plans to offer an ad-supported video streaming service.”

Amazon’s Prime Instant Video offering already competes with subscription-based OTT  services such as Netflix and Hulu Plus, but a new advertising-based offering could enable  Amazon to put more heat on other free, ad-supported online VOD services such as Sony-owned Crackle and TubiTV, which launched in April. Depending on the quality of its ad-supported library, Amazon’s purported new offering might also lock horns with MVPD-delivered VOD. 

Amazon has not disclosed how many customers are on its Prime service, though the NY Post notes that RBC Capital analyst Mark Mahaney believes it’s in the neighborhood of 50 million.

Although Netflix continues to dominate fixed wireline broadband traffic, Amazon Instant Video has been gaining ground, according to a report issued this week by bandwidth management firm Sandvine.