Amazon announces the ad-free additional offer Prime Video Ultra in the USA – and increases the prices for it. This is already causing criticism in Germany.
• Prime Video Ultra launch announced in the US
• Advertising freedom & extras only for an additional charge
• Criticism in Germany over advertising and subscription changes
Amazon is continuing to push forward its pricing strategy for the Amazon streaming service. As can be seen from a statement from the company on March 13th, the next price increase for Prime Video is already looming: the additional Prime Video Ultra offer will start in the USA from April 10th. Then it is the only way for Prime subscribers to remain ad-free when streaming on Prime Video.
The previous ad-free option “Prime Video Ad Free” currently costs $2.99 per month (2.99 euros in Germany), the new Ultra version will cost $4.99 – a price increase of 67 percent.
It is currently unclear whether and when Prime Video Ultra, including the changes for existing subscribers, will come to Germany. As a rule, Amazon first tests such subscription innovations on its home market before introducing them internationally.
New features at an additional cost
Prime Video Ultra is intended to offer more than just ad-free streaming. According to Amazon, 4K/UHD content as well as Dolby Atmos will be available exclusively to Ultra customers. Regular Prime customers have to make do with HD quality, Dolby Vision and HDR. The new tariff also allows five parallel streams and up to 100 downloads for offline use, while standard customers can continue to use four streams and 50 downloads. The additional option signals that Amazon is increasingly relying on a tiered pricing model: more convenience and exclusive content for an additional charge.
Consumer reactions in Germany
This development has met with criticism in Germany. Consumer organizations see the introduction of advertising on Prime Video as a de facto price increase that cannot be implemented unilaterally for existing customers. According to the organization, more than 200,000 people have now registered for a class action lawsuit brought by the Saxony Consumer Center against the streaming service. The point of contention is the introduction of advertising on Prime Video, which the consumer advice center considers to be a hidden price increase.
German courts have ruled in the past that contract changes for streaming services require the consent of customers – a legal area of tension that poses challenges for Amazon.
Impact on Amazon shares
Financially, Prime Video Ultra could be a real moneymaker for Amazon. Analysts see potential for significantly higher subscription sales. It is already clear that surcharge models for streaming services are profitable because customers are willing to pay for advertising absence and better quality – a trend that could increase subscription sales and thus also support the growth of Amazon shares.
Following the announcement, BofA Securities reiterated its Buy rating on Amazon shares with a price target of $275, Investing.com reported. Analysts estimate that the price increase could generate up to $780 million in additional revenue annually for around 20 percent of Prime Video users, it is said. Overall, the measure could increase subscription growth by around 1 percentage point and further expand the already strong subscription revenue of around $52 billion annually – which is considered a good signal for investors and could support the share’s valuation.
Amazon shares have so far reacted to the price adjustment without any major price jumps. On Monday it was ultimately up 1.96 percent at $211.74. On Tuesday it was temporarily 1.40 percent higher at $214.71.
Bettina Schneider, editorial team at finanzen.net
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