Regional platforms likely to see impact of Prime Video ad tier, JioStar merger

“The entry of major players into India’s AVoD (advertising video-on-demand) market could present significant challenges for smaller and regional platforms. These smaller players, often constrained by limited resources and audience reach, may find it difficult to compete for national ad budgets as advertisers gravitate towards platforms with larger audiences and higher brand visibility,” said Sameer Jain, managing director at Primus Partners, a management consultancy firm. 

Increasing costs

Competing in a content-rich environment will likely drive up content acquisition and production costs, putting additional financial pressure on these platforms, Jain added. Moreover, smaller platforms that rely on niche audiences and content genres might struggle to attract viewers and secure ad revenue if advertisers prioritize established players with vast reach, potentially limiting their growth in a space dominated by well-funded competitors.

No certain player will get pushed out suddenly. But with the entry of new players, each inventory will lose some business as the media mix will get diversified and the budgets will not rise with the entry of new players, said Shlok Hari, director – SW Growth Labs (SW Network), an integrated advertising agency. “What will set certain platforms apart is their offering beyond content, specifically the detailed targeting they can provide and also the supporting tracking tech that can help understand campaign impact,” Hari added. 

That said, Prime Video will face the challenge of no ‘big or mainstream’ sports offering, given that sport is highly engaging and commands a higher price per slot. On the other hand, even though the JioStar entity has a monopoly when it comes to sports deals, it will face an adverse challenge of premium content, with players like Prime Video and Netflix hosting a more premium set of users and their content commanding certain engagement and respect.

Prime Video will face the challenge of no ‘big or mainstream’ sports offering.

More competition

Prime Video’s decision to incorporate ads may heighten competition among streaming platforms and shift advertising dollars from traditional TV to digital, said Tejas Maha, group head – media at digital agency White Rivers Media. “This evolution pushes brands to prioritise targeted advertising opportunities, particularly through connected TV. 

The hiccup for Prime Video will be balancing monetisation with retention, while Jio Disney navigates the complex landscape of cricket rights and regulations,” Maha said adding that smaller and regional players, on the other hand, have the potential to carve out niches by focusing on localised content.

To be sure, some entertainment industry experts believe while the JioStar entity will truly move the needle as far as change in the advertising landscape goes, competing with the likes of YouTube, Prime Video is simply looking at the ad tier as a way to gain more data to target customers better for shopping. 

Ad-supported models on streaming platforms

Sahil Chopra, founder and CEO at iCubesWire, a marketing agency said Amazon Prime Video’s introduction of ads in India signifies a broader industry trend where streaming platforms adopt ad-supported models. This expansion provides advertisers new avenues to reach audiences, especially as digital consumption continues to rise. The move is expected to enhance Amazon’s advertising business while maintaining a commitment to providing fewer ads than other streaming services and TV channels.

“For Prime Video, introducing ads on a traditionally ad-free platform presents challenges in balancing monetization with user experience. Subscribers accustomed to uninterrupted content may initially resist the change, so Prime Video will need to manage ad loads carefully and consider offering an ad-free option for premium subscribers to minimize backlash,” Jain said. 

Additionally, Prime Video will need to develop robust targeting and measurement tools to compete in a market where established players already hold strong brand loyalty and market share. Managing ad pricing and inventory efficiently will be another key factor as it navigates this new advertising model, Jain added.

Key Takeaways

1. The entry of major players like Prime Video and JioStar into India’s AVoD (advertising video-on-demand) market could present significant challenges for smaller and regional platforms. 
2. Smaller platforms that rely on niche audiences and content genres might struggle to attract viewers and secure ad revenue if advertisers prioritize established players with vast reach. 
3. Prime Video will face the challenge of no ‘big or mainstream’ sports offering, while the JioStar entity does not host the kind of premium originals players like Prime Video and Netflix do. 
4. Additionally, Prime Video will need to develop robust targeting and measurement tools to compete in a market where established players already hold strong brand loyalty and market share.