Discover how Amazon Prime Video makes billions through subscriptions, ads, pay-per-view, and strategic investments in live sports streaming. Continue reading
Amazon Prime Video isn’t just another streaming service—it’s a global entertainment powerhouse competing with Netflix and Disney+. Unlike Netflix, which relies solely on subscriptions, Prime Video has multiple revenue streams, from advertising and live sports deals to rentals and premium add-ons.
But how exactly does Prime Video make money? Is it profitable, or is Amazon playing the long game?
In this blog, we’ll break down Prime Video’s revenue model and explore its biggest moneymakers. Let’s dive in and find out.
In 2011, Amazon launched its bundled video streaming service for Prime memberships, challenging the video streaming giant – Netflix. Initially, the video-on-demand service was available only to users in the US, but over time, Amazon Prime Video expanded its service globally and became a one-stop entertainment destination for viewers and advertisers.
When Amazon launched its on-demand video streaming service in the US, it had only 5 million users. As it expanded globally across nations like the UK, Japan, Germany, India, and Austria, it crossed 40 million subscribers in 2015.
Thanks to its continuous global expansion strategy and major investments in producing regional content, it crossed 100 million global users in 2019, becoming a top Netflix competitor.
Then happened the pandemic boom and Amazon Prime Video reached 200 million global users. Currently, as of 2024 reports, Prime Video is catering to 220 million global subscribers monthly, out of which 163.3 million users are from the US, compared to Netflix’s 173.7 million users in the US.
According to Statista, Prime Video is expected to reach a record high users of 269 million by 2029 and Prime Video’s global revenue is expected to hit 80 billion dollars.
According to Statista, Amazon Prime Video was the most popular transactional video-on-demand service in the US and Canada region. Prime Video’s subscriber base across the US and Canada accounts for a whopping 178.2 million users.
Prime Video has seen rapid growth in the APAC region (Particularly in India, Japan, and Australia) with 90 million digital streaming subscribers. The key drivers of this growth are strategic investments in regional content and cheaper mobile plans.
Also, in the EU region, Prime Video’s subscriber growth is outstanding with 88.2 million users. Exclusive Broadcasting of Premier Leagues and strong local originals are said to be the key drivers of this subscriber growth.
Prime Video has seen massive revenue growth over the years. If you ask how Amazon Prime Video makes money, the major factors would refer to subscriptions, advertising, live sports broadcasting, rentals, and partnerships. As per recent reports, Prime Video subscriptions have earned 32.87 million dollars in revenue (Q3 2024) and are expected to surpass last year’s 2023 annual revenue of $40.2 billion.
In the early days, when Amazon Prime Video was focused on purely customer retention, it registered a revenue of $2.76 billion in 2014. From there to today, in the past 10 years, Amazon Prime Video has been able to make 20X more revenue, reaching 40 billion dollars.
The major revenue growth drivers of Prime Video involve strategic global expansion, pandemic boost, rentals, original regional productions, ad-supported streaming, and live sports.
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As of Q3 2024, Amazon Prime’s total revenue reached $32.87 Billion. Last year in 2023, Amazon Prime revenue was $40.2 Billion. Besides, from 2014 to 2024, Amazon Prime’s revenue has grown significantly from $2.76 Billion to $40 Billion.
Amazon Prime Video makes revenue from multiple monetization models. It offers content that comes bundled with the basic subscription price, special screenings that come at a rental cost. The video-on-demand service also runs a variety of ads to generate an additional source of revenue. Lastly, Prime Video also makes money from exclusive live sports streaming, which started recently.
Unlike Netflix, which relies mainly on subscriptions, Prime Video bundles its service with Amazon Prime, making it harder to calculate revenue per viewership.
Prime Video earns money in multiple ways that include a combination of earnings from advertising, subscriptions, and rental services. Here are the monetization methods of Amazon Prime Video. To understand how does Prime Video makes money, it is critical to study the monetization methods adopted by Prime Video.
This part of the business model of Prime Video is based on subscriptions. Customers pay a fee to access the service, and in return, they can stream a variety of TV shows, movies, and other video content.
Amazon also offers a standalone subscription to Prime Video, which is available to non-Prime members for a monthly fee. The subscription prices vary depending on the region you are located in.
In the United States, for example, it starts at US $14.99 a month whereas in India you can get the same subscription for a little less than US $2 a month. This subscription lets users access the various movies, TV shows, and other content that is available on the platform. Some content is restricted for a particular region, while some may require additional money to access, something we read about in the next section.
In addition to subscriptions, Prime Video also generates revenue through the sale or rental of individual TV shows and movies. Customers can purchase or rent a specific piece of content for a one-time fee, which is added to their Amazon account.
Many movies and sometimes even sports tournaments may require you to pay additional fees to access the content. This gets Amazon an additional source of revenue, but many times it is a contractual obligation that Amazon may have with the 3rd party.
A cricket match, for example, can have 10M+ consistent viewership in India, which means Amazon has to deploy additional resources to broadcast. So, Amazon puts a small fee to give you access. It also puts ads, which is the next segment of Amazon’s multiple ways to earn revenue.
Another way that Prime Video makes money is through advertising. The service includes ads in some of its programming, and it also offers targeted advertising opportunities to companies that want to reach a specific audience.
Amazon offers multiple advertisement opportunities to people where they can have ads on the videos available on the website, targeting specific audiences based on their interests, usage patterns, ages, etc. Amazon earns a whopping amount of money by displaying ads during video streaming, which also means it enables Prime Video to provide various content services at a lesser cost.
The content available on Prime Video can be divided into several categories. Every piece of content that is available to stream on Prime Video can be categorized into three different categories.
Prime Video uses a combination of content acquisition and creation techniques to deliver different tastes of content to the end users. Here’s how Amazon Prime Video leads the content game.
Prime Video, like other streaming platforms, acquires third-party content through licensing agreements with content owners or production studios. These agreements allow Prime Video to legally stream the content on its platform in exchange for a fee.
The process of acquiring third-party content for streaming platforms involves complex negotiations and contracts to secure the rights to the content. The terms of these agreements can vary widely and can include exclusivity, geography, length of the license, and other terms and conditions.
Amazon Original Series are television shows or movies that are produced by Amazon Studios and are available exclusively on the Prime Video streaming service. Some popular Amazon Original Series include “The Marvelous Mrs. Maisel,” “The Man in the High Castle,” and “The Boys.”
These shows are produced by Amazon Studios and often feature top talent, including well-known actors, writers, and directors. Amazon, just like Netflix, has tapped talent all across the globe and started producing movies and shows under the Amazon Studios tag. These shows are then promoted and broadcasted on the platform and revenue is earned from the various monetization options.
Amazon has started streaming sports tournaments on its Prime Video platform too. Prime Video got the exclusive rights to broadcast all international cricket matches played against New Zealand for both Men and Women’s cricket teams for the next four years.
Prime Video is slowly acquiring the various rights to multiple sporting tournaments across the globe. This gives Amazon another opportunity to earn through advertising as well as taking a one-time fee for live streaming.
Here are a few popular tournaments Prime Video broadcasts region-wise:
Amazon, as we see, has deployed all the models to earn revenue from streaming live as well as on-demand content. Over the years, with skillful acquiring, it has gotten the rights to various iconic movies and shows that garner high viewership even today. It has a mixture of timeless classics such as the Harry Potter series and also introduced country-specific content under its own production house.
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While Amazon Prime Video generates significant annual revenue, a huge expense is being borne by Prime Video every year to keep its platform running among all the competition. A majority of Prime Video’s expenses go towards content acquisition and production, streaming technology and infrastructure, and marketing & operations.
Let’s understand the spendings of Prime Video in detail.
Amazon Prime Video has consistently increased its investment in content to attract and retain subscribers.
As per the recent reports, Amazon Prime video content spending rose 14% to nearly 19 billion in 2023.
Such huge investments encompass original programming, licensed content, and live sports broadcasting rights. For instance, in 2022, Prime Video secured exclusive rights to stream “Thursday Night Football,” significantly boosting its sports content portfolio.
Amazon Prime Video flaunts the most advanced streaming infrastructure that involves data storage, CDNs, encoders, video player, monetization engines, and others.
No doubt, it spends a hefty amount every month in maintaining the infrastructure. But specific annual expenditures on technology and infrastructure are not publicly disclosed.
Moreover, Amazon leverages its in-house cloud computing arm, Amazon Web Services (AWS), to power Prime Video. This integration allows for scalable and efficient streaming capabilities, reducing reliance on third-party services and optimizing operational costs.
Amazon Prime Video’s marketing expenses include promotional campaigns, advertising, and strategic partnerships to enhance subscriber growth. The video streaming platform spends a hefty sum for customer acquisition, particularly in countries like India, Japan, South Korea, and Australia.
Prime Video has also collaborated with telecom and Internet service providers, offering its premium video streaming services as part of subscription bundles. It predicted that Prime Video spends around 18% of its expenditure on marketing & promotions.
As per recent reports by Reuters, Amazon Prime Video has shifted its strategic focus towards live sports streaming and away from traditional ways of depending on original content for generating revenue.
Live sports events bring in real-time viewership and provide a platform for strategic ad placement, boosting ad revenues.
This move comes with an intent to enhance profitability and meet annual revenue targets.
These investments underscore Amazon’s strategy to balance content quality, technological excellence, and monetization to maintain Prime Video’s competitive edge in the streaming industry. And after cutting out these huge expenses, Amazon Prime Video has a nominal profit year-on-year basis. Hope, now you have an idea of how does Amazon Prime Video make money.
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It is hard to tell on Amazon Prime Video’s profitability as it has heavily invested in content, infrastructure, and sports rights, but it drives significant value by increasing Prime memberships, e-commerce spending, and now ad revenue, making it a strategic profit making video streaming platform.
Netflix makes money primarily through monthly subscriptions (SVOD), while Amazon Prime Video generates revenue from Prime memberships, ads (AVOD), pay-per-view (TVOD), and add-on channels, leveraging its streaming service to boost e-commerce sales.
Written by: Richi Milan
Richi is a passionate content marketing enthusiast with hands-on experience in strategizing and creating compelling content. Currently, working with world's best OTT platform provider - Muvi. Dive-in and explore the OTT-verse with Richi!!
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