Ads fulfill two important strategic priorities for Netflix: enabling lower prices to consumers and creating an additional revenue stream. The ads tier accounts for over 45% of all signups. Amazon undercuts Netflix's ad rates in the streaming sector to gain market share, affecting Netflix's ability to boost earnings.
Amazon's ad-supported Prime Video, priced at $8.99/month, competes with Netflix. It converted over 200mn subscribers to ad-supported unless they chose the premium ad-free service. This strategic move increases Amazon's ad inventory and revenue.
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