Amazon and its subsidiary company IMDb are preparing to launch a free, ad-supported service for its Fire TV digital media player “similar to The Roku Channel or some parts of Hulu,” CNBC reported on Tuesday, citing sources knowledgeable about the project.
According to CNBC, the new channel will feature a library of both shows and movies, and it will support both interstitial ads and ones wrapped around the video player itself. Amazon would also allow marketers access to its user data in what CNBC reported would be the first time it has done so on the Fire TV platform:
The service will also help Amazon continue to grow its share of the digital advertising market, which is dominated by Google and Facebook. According to eMarketer, Amazon is now the third-largest digital advertiser, with about 4 per cent of the market; Google and Facebook combined have more than 57 per cent.
On the new service, advertisements can appear between content, and marketers will be able to wrap ads around an embedded video “player,” similar to the experience on many web sites. Amazon already allows commercials on content on Fire TV apps, but this would vastly expand the offering and allow for more insights from Amazon’s massive user base.
According to CNBC’s report, the free service seems intended to draw on media companies’ libraries of older content. There’s mention in the article about the possibility that Amazon could set up a similar ad-supported service featuring Prime Video content, but Amazon told CNBC it does not currently have any plans to do so.
News of the service first broke in The Information, which reported that the channel’s name may be Free Dive. (That name seems to conjure up something like a grab-bag of older content, though presumably IMDb and its extensive database of reviews will play some role in curating its library.)
While Amazon’s ad business still constitutes only a tiny portion of its overall revenue, The Information noted that it is rapidly expanding:
It makes upmost of the “other” segment in Amazon’s earnings statements, growing 132% to $2.2 billion [$AU3 billion] in the second quarter. Wall Street firm Cowen estimates it will generate $8 billion [$AU11 billion] in revenue from the category this year. That’s still a tiny fraction of Amazon’s expected $200 billion-plus [$AU278 billion-plus] revenue this year. And it is well behind what Facebook and Google make from digital advertising — Facebook had $13 billion [$AU18 billion] in advertising in the second quarter alone. But Amazon’s access to shopping data gives it the chance to become a formidable rival.
While TV networks still receive the bulk of video advertising, the site added, Amazon hopes that it can capitalise on its extensive databases of customer info to offer “more video inventory to advertisers that are eager to use the company’s targeting capabilities”.
One key advantage for Amazon is that the platform is projected to control half of the US e-commerce market, and all that shopping data could eventually help it take on the Facebook-Google duopoly in online ad dollars.
According to The Information, Amazon also recently announced it would be introducing more ads to streaming platform Twitch, a subsidiary, including on its “previously ad-free paid version”.