Amazon will make up to $7 billion in revenue from Prime Video ads, according to Wall Street analysts

• Amazon will begin rolling out ads in Prime Video next year.
• These ads could net between $6B to $7B in revenue, according to Wall Street analysts.
• Amazon believes these ads will reach 115 million monthly US users.

According to three new Wall Street notes, Amazon’s decision to begin running ads within Prime Video in early 2024 could generate up to $7 billion in ad revenue.

According to a new note from UBS, Prime Video ads will generate $6.2 billion in incremental revenue for Amazon’s US ad business and $1 billion for its ad business outside the US. UBS estimated that Prime Video is watched 14.3 billion hours per day in the United States based on Nielsen data.

UBS raised its forecast for Amazon’s advertising revenue this year to $55.8 billion, up from $52.7 billion previously.

UBS isn’t the only Wall Street firm betting that Amazon’s Prime Video advertisements will generate billions of dollars.

Wedbush forecasted $7.2 billion in additional ad revenue for Amazon if all Prime Video users opt-in to watching ads in a note last week.

Evercore analysts forecasted $7 billion in annual ad revenue for Prime Video ads in a note last week, based on Prime Video having three minutes of ads per hour — slightly less than Disney+, Netflix, and Warner Bros. Discovery’s Max, which have four to five minute ad loads.

According to UBS, Amazon’s ad load could increase to around six minutes per hour.

UBS predicts that Prime Video ads will cost between $30 and $42 per 1,000 people. According to UBS, the $42 CPM is comparable to what Netflix and other premium streaming services charge. Analysts at Wedbush expect Amazon to charge $50 CPMs for Prime Video ads.

According to Insider, Amazon estimates that Prime Video ads will initially reach more than 115 million US monthly users.

Amazon is also promoting Prime Video’s premium content by providing statistics about its shopper-heavy audience. According to a recent briefing document sent to advertisers, more than 25% of Prime Video households are likely to have an annual household income of more than $150,000.

Ads will be added to Prime Video shows and movies in the United States, the United Kingdom, Canada, and Germany in early 2024, followed by France, Spain, Italy, Mexico, and Australia later that year. Users of Prime Video can opt out of advertising by paying an additional $2.99 per month.