Prime Video: An Underrated Asset of Amazon

usiness with surprising strategic upside: Prime Video.

Amazon’s Prime Video was initially seen as just a bonus for Prime members, a little extra something to sweeten the deal. But now, it’s taking on a whole new level of importance. With a new ad-supported model, a strong position in connected TV, and seamless integration into Amazon’s overall retail ecosystem, Prime Video is proving to be a key player in Amazon’s growth strategy.

When Prime Video first launched, it wasn’t trying to compete head-on with big players like Netflix or Disney. Instead, it was aimed at boosting Prime subscriptions, building customer loyalty, and keeping people engaged on the e-commerce platform. And it worked. But now, it’s evolving into a platform in its own right. Customers not only get free content as Prime members, but they can also subscribe to third-party channels through Amazon Channel. And as of January 2024, Amazon started running ads on Prime Video, opening up a huge audience of over 200 million viewers to advertisers worldwide.

Beyond just offering free content to subscribers, Prime Video is beefing up its original content, live sports, and localized offerings in various markets. This expansion is setting the stage for Prime Video to become a highly profitable part of Amazon’s business, rather than just a cost center.

Amazon Ads is another area where Prime Video is making waves. By incorporating ads into Prime Video in key markets, Amazon is capitalizing on its massive Prime membership base. While Prime members can opt for an ad-free experience for a small fee, most choose to watch ads, making Prime Video one of the largest ad-supported streaming platforms globally. And with over 200 million viewers, Prime Video is already holding its own among the biggest streaming services worldwide. Plus, Amazon’s ad targeting takes advantage of its vast retail data, allowing brands to reach viewers based on their actual purchase behavior. It’s an advertising model that few competitors can match.

But Prime Video isn’t just about content and advertising. It’s also Amazon’s entry point into the living room through connected TV. With over 200 million Fire TV devices sold globally, Amazon has a direct line to users and a powerful way to serve up ads and content. While other media companies are still figuring out how to combine streaming, commerce, and advertising, Amazon is way ahead of the game. This connectivity gives advertisers a unique opportunity to engage with audiences on Prime Video and drive sales through Amazon’s retail platform. It’s a seamless experience that few others can offer.

Investors often view Amazon as separate parts: retail, cloud, advertising, and so on. But the real strength of Amazon lies in how these parts come together. Prime Video, once seen as a bonus feature, is now a key strategic asset. By weaving together entertainment, commerce, and advertising, Amazon is creating a future where Prime Video not only entertains but also drives growth across the entire business.

So, if you’re thinking about investing in Amazon, it’s worth taking a closer look at Prime Video. It’s no longer just a nice add-on—it’s a powerhouse in its own right.