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Ad revenues grew 18% in Q1, driven by strong demand for sponsored ads on its marketplace as well as growing interest in Prime Video ads. The headwinds: Amazon is trying to control the controllables, but little about the current situation is precedented or predictable.

While several perks are offered via Amazon-owned businesses like Prime Video and Amazon Music, the retailer has sought to broaden Prime鈥檚 utility by expanding its offerings beyond its ecosystem. For example, in addition to free membership in Grubhub+, it offers fuel discounts at roughly 7,000 bp, Amoco, and ampm locations across the US.

Prime Video (42%), Hulu (32%), and Tubi (30%) are also widely used鈥攕uggesting this audience is deeply engaged with both subscription-based and free, ad-supported models. ViX鈥檚 ad-supported tier and evolving format options are clearly designed to meet these habits.

础尘补锄辞苍鈥檚 ad-supported Prime Video rollout made it a top contender. Amazon has further blurred the lines between retail media and streaming. With Prime Video ads, Amazon is enhancing its retail media capabilities by incorporating top-of-funnel brand awareness in a way most competitors cannot match. It can uniquely measure both TV ad performance and brand awareness.

PepsiCo specifically saw growth from implementing Amazon Ads鈥� AI tools: notably, a 9.2% lift in content awareness; 133% higher purchase rate via combined third-party and Prime Video media; and 79% incremental reach via third-party programmatic guaranteed deals. Yes, but: There are challenges limiting the industry鈥檚 ability to fully capitalize on these trends.

Following Netflix鈥檚 lead in both ad-supported and subscription-based video are Amazon Prime Video, Disney+, Apple TV+, and Crave from Bell Media. Crave鈥攚hich is home to HBO Max content in Canada鈥攊s a homegrown service and has gained more than 1 million subscribers since 2020. Gen Z and millennials are the primary consumers of digital video.

The exception is 础尘补锄辞苍鈥檚 Freevee, which 11% have used (albeit Freevee is being migrated into 础尘补锄辞苍鈥檚 Prime Video offering). Consumers currently see FAST as a niche fallback option, so a huge surge in uptake is unlikely. Advertising is becoming an increasing part of this media mix. The streaming video landscape as it pertains to CTV has been dominated by ad-free options.

Amazon is shaking up the streaming CPM market: Prime Video ads will launch with $30 CPMs at the end of the month in a sign that streaming ad costs are stabilizing.

Amazon launched shoppable ads on Prime Video and entered a partnership with TikTok to enable purchases of Amazon products via ads on the TikTok app. Walmart expanded its retail media offering to linear TV (using QR codes) through its partnership with NBCUniversal.

Only 22% of connected TV (CTV) users watched Apple TV+ in 2024, per LG, compared with 45% for Hulu, 61% for Amazon Prime Video, and 66% for Netflix. Services as the breadwinner: Apple鈥檚 growing Services business, which includes iCloud and the App Store, has been propping up the company鈥檚 AI ambitions as well as sluggish iPhone sales. Net sales for Services reached $96.2 billion in 2024, up 13% YoY.

Still, the impact could extend beyond its ecommerce business: 48% of participants plan to avoid shopping at Whole Foods, while 45% will avoid Prime Video content and 13% plan to cancel their Prime memberships. Yes, but: At the same time, there are limits to how far people are willing to go, particularly when it involves a retailer that offers nearly unmatched convenience and product selection.

础尘补锄辞苍鈥檚 Prime Video and Netflix took very different approaches to implement their new ad tiers. Prime Video defaulted viewers to its ad tier, which represents 80.0% of its US audience, per our forecast. Advertising is a distant priority behind subscription revenues and preserving UX for Netflix, which has gradually placed more viewers onto its ad plan.

Similarly, Amazon could continue to bundle value services into its Prime memberships to sustain profits or expand standalone Prime Video subscriptions to be more competitive. Microsoft鈥檚 AI expansion gives it opportunities to upsell Microsoft 365 subscriptions with cutting-edge features.

础尘补锄辞苍鈥檚 Prime video-only subscription has almost no marketing and has been absent from investor calls since its 2016 introduction, indicating that the video-only version may have hurt core Prime memberships. How it affects advertising: While a less-expensive ad-free tier might be appealing to audiences, it could have an impact on YouTube鈥檚 expected ad revenue growth.

Introducing ad-supported tiers on Prime Video and testing new shoppable formats: In May 2024, a few months after launching ads on Prime Video, Amazon began experimenting with interactive and directly shoppable video ad formats. Piloting non-endemic search: In February 2025, Amazon began testing the inclusion of third-party products in search results.

To offset revenue losses from smaller merchants pulling back spending, Amazon is investing more in Prime Video ads. That will help it diversify revenues and reduce reliance on marketplace sellers. Prime Video ads can tap into higher-margin, brand-focused advertising from large companies, which are less sensitive to retail supply chain pressures.

Decoding Amazon's pitch deck: From Preferred Deals to Premium Sponsorships, Prime Video aims to set new standards in ad-supported streaming.

Prime Video will soon add NBA and WNBA games to its sports portfolio, which already includes select NFL, MLB, and NHL games. Peacock is also adding NBA games to a sports roster that includes NFL games, college football, college basketball, soccer, NASCAR, and Olympics coverage. The Roku Channel features Sunday morning MLB games.

That鈥檚 significantly higher than Hulu, Disney+, or Amazon Prime Video. Our take: As streaming services battle over user attention, expect more emphasis on compelling storytelling that sparks discussion鈥攏ot just endless volumes of content. The platforms that deliver cultural moments like 鈥淎dolescence鈥� will be the ones users keep coming back to.

How streaming services are adapting to 础尘补锄辞苍鈥檚 shakeup: The launch of ads on Prime Video in January has forced Netflix and others to lower CPMs to compete.

Amazon Prime Video will introduce ads to its streaming content starting on January 29. The move will leverage 础尘补锄辞苍鈥檚 existing ad business and first-party retail media data to deliver ads on video content, something the company already does on Freevee and Fire TV. Here are five charts to prepare advertisers for this change.