1. Amazon Goes All In For Ads

They did, at least, remember to ask.

When I logged on this Monday, Amazon politely offered me the opportunity to upgrade to the ad-free tier for just $3/month.

I was admittedly torn. On the one hand, $3/month is a small price to pay to avoid ads. On the other, I low key felt that I should probably watch at least a month worth of Amazon Prime Video with ads so that I could pretend to know what I was talking about. It’s not as if I watch all that much on there to begin with—mostly rental movies and my PBS Masterpiece subscription—so it should not prove all that onerous.

I suspect a similar debate was going on in the heads of many Amazon subscribers this week, and it is our TVREV prediction that 70 percent of them will forgo giving Amazon that extra $36 per annum and thus join the ranks of ad-supported subscription viewers.

Which increases the audience for ad-supported subscription streaming by something like 4X or 5X.

Why It Matters

To review our math (I went to Stuyvesant, we’re good at that sort of stuff): 

While Amazon does not release subscriber numbers, most estimates assume there are somewhere between 160 million and 170 million Prime subscribers in the US. Where it gets tricky is that it is unclear how many of them actually watch Prime Video, versus just subscribing for the free two-day delivery.

Figure though, that around half of them watch Prime Video at some point each month—that’s 80 to 85 million people. And if 70 percent of those people wind up in the ad-supported tier… that’s somewhere between 55 to 60 million new ad-supported streaming viewers in the US alone. (For comparison, Netflix only has 23 million ad-supported viewers worldwide.)

That’s a tsunami-level event.

Perhaps even more relevant is the fact that Amazon has some very valuable data on all those viewers. I mean it’s all “Prime” right?

So they know that even though you might “like” Starbucks on Facebook and search of “Starbucks near me” on Google, you actually buy Maxwell House every month.

Similarly, they know what you browsed, what you put in your cart but opted not to buy, what you sent to your aunt for her birthday.

Safe to say they can offer brands some very valuable targeting information. And charge them up the proverbial wazoo for the privilege.

They can also have those same products pop up on your Amazon home page next time you log on. Safe in the knowledge that a goodly percentage of users will regard that as a funny coincidence. Not a paid ad placement.

So there’s all that.

Then there are all those originals.

Right now Amazon’s been pushing a series called Expats that stars Nicole Kidman. (Or at least that’s what they’ve been pushing at me.) But the fact is they have a decent number of original series.

And here’s why that matters: talk to the sort of advertisers who traditionally spend nine-digit sums on TV advertising.

They are all in favor of streaming. 

As a reach extension vehicle.

But hell if they are going to take their $20 million TV commercial and spend most of their budget showing it against a bunch of reruns.

Because no matter how you package it, that is most of the inventory that’s available on streaming. 

Hulu being the sole exception.

So now that they can reach those 55 million Amazon subscribers on original shows, original shows starring Nicole Kidman no less, well, that’s a very different ballgame indeed.

What You Need To Do About It

So the first thing you need to do is double check our math, something you likely won’t be able to do for a few months.

How many people took Amazon up on their upgrade to ad-free offer? (It’s not as if they’re going to tell you.)

And how many will take them up on it in the months to come?

Right now Amazon has a button on the left hand nav of the TV app that says “Go Ad Free.” So they’re not trying to hide it as I had thought they might. Which means more people might take them up on it. 

Or not.

We’ll know soon enough but it’s safe to assume that Amazon has a target number of ad-free subscribers in mind.

The other thing to watch for is what Amazon’s CPMs are (how much they’re charging for ads) and whether those go way up for originals. And then what affect all that has on the price of other streaming CPMs. (My guess is that a rising tide lifts all boats, but we will be keeping an eye on it nonetheless.)

2. Syncbak Launches A New(ish) Local Streaming App

As part of the ongoing migration of local broadcast to streaming (as outlined in a certain Special Report), Syncbak has partnered with Gray Television, NAB, CBS and Hearst (among others) to roll out an app called Zeam that will bring over 300 local TV stations and their news shows to a national streaming audience.

The app, which Syncbak is calling an “evolution” of VUit, its OG app (which has been downgraded to a “proof of concept”), will make use of Syncbak’s proprietary ad platform to streamline the process and allow advertisers to reach multiple local audiences.

The company is spending over $10 million on the launch, which features Super Bowl ads (local, of course) starring John Stamos, a branded mobile van and a production studio in Times Square.

Why It Matters

The local market is huge—BIA estimates that local TV will see $23.8 billion in ad spend this year. But standing up their own operations is both expensive and inefficient for local broadcasters and broadcast groups.

Many have been partnering with FAST services, who see having local news as a key selling point for streaming-first audiences.

Having a local-only app with over 300 stations would seem to mostly be a boon for advertisers, as they can buy multiple markets with a single click.

The appeal for viewers will be trickier. 

If I can watch my local station on, say, The Roku Channel, where I can also take advantage of their linear comedy channels and on demand movies, then launching a separate app for local news might seem unnecessary.

That said, if Zeam can start rolling out the sort of syndicated programming that local TV has thrived on for years—talks shows, judge shows and the like—then it just might find an audience.

What You Need To Do About It

If you are a local broadcaster and you are not part of the Zeam team, it’s well worth keeping an eye on it. Having an easy way for advertisers to find you on streaming is not a bad thing.

If you are Syncbak, remember that this is not Field of Dreams. Just because you built it, they won’t necessarily come. You need to give viewers a reason to come to you for their local TV needs rather than a FAST service that has a range of content options for them. 

Some thoughts: local sports—minor league baseball, NBA D-League and the like, the aforementioned syndicated programs, and news adjacent programming like nature docs.

I would also strongly consider launching a self-service platform to net all those local advertisers spending their money on Meta and Alphabet. Zeam would seem to be an ideal alternative.

ALSO:

Check me out on Carlo DeMarchis’s A Guy With A Scarf podcast

Read: Living in Their Own Private Dunkirk? How the Media Giants Misstepped in Their Rush to Mirror Netflix [Next TV]