Starting Monday, many of Amazon‘s Prime Video users will see something they’ve never seen before: commercials in TV shows and movies.

Amazon will begin serving ads in Prime Video content by default in major markets Jan. 29, unless users opt to pay extra ($2.99/month in the U.S.) to have an ad-free experience. The company promises to have “meaningfully fewer ads than linear TV and other streaming TV providers” and will first launch ads in the U.S., U.K., Germany, and Canada, to be followed by France, Italy, Spain, Mexico and Australia later in the year.

The results? Amazon will hit the ground running in a massive way.

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Morgan Stanley forecasts Prime Video ads will generate $3.3 billion in revenue in 2024 worldwide, growing to $5.2 billion in ’25 and $7.1 billion in ’26. The initiative should tack on nearly $2.3 billion in annual earnings before interest, taxes, depreciation and amortization (EBITDA) in 2024, per the Wall Street firm’s current forecast.

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Analyst firm MoffettNathanson has more conservative expectations — but still believes Amazon’s move will be seismic. The firm’s analysts peg revenue from Prime Video ads at $1.3 billion in 2024, rising to $2.3 billion next year. But that’s not all: The ecommerce company stands to pull in an incremental $500 million per year in ’24 and ’25 from Prime members who want to avoid seeing ads, per the analysts’ models.

“This Monday, we are going to find out what happens to an advertising market when a brand-new entrant with excess capacity, unrivaled first-party data advantages and massive unduplicated reach decides to put a ‘for sale’ sign in its window,” MoffettNathanson analysts led by Michael Morton wrote in a Jan. 26 research note.

Amazon is poised to steal share from cable networks and ad-supported VOD players, the MoffettNathanson team predicts: “[W]e strongly believe that Amazon’s decision to add advertising to Prime Video will be a disruptive force to commoditized AVOD players, siloed CTV platforms and non-top 20 linear cable networks,” the analysts wrote.

At the Variety Entertainment Summit at CES 2024, Alexys Coronel, head of U.S. entertainment and telecommunications for Amazon Ads, talked about the coming launch of ads in Prime Video, which she said will be able to reach 115 million unique viewers in the U.S. alone.

“That’s incredible for us. It’s a huge untapped resource,” she said, adding, “It’s a huge step change for us.”

The addition of streaming-video inventory on Prime Video promises to give a jolt to Amazon’s already massive market share in digital ads. In the third quarter of 2023, the tech company reported ad revenue of $12.06 billion — up 26% year over year, as it touted strong viewership from the NFL’s “Thursday Night Football” games exclusively on Prime Video U.S.

“We have barely scraped the surface when it comes to better figuring out how to integrate advertising into video, commerce and groceries,” Amazon CEO Andy Jassy told analysts on the earnings call.

Amazon has about 96 million U.S. Prime households, but fewer than regularly watch Prime Video. MoffettNathanson’s projections assume Prime Video has an active U.S. subscriber base that is equivalent to Netflix’s 70 million.

Most of those Prime Video users are expected to let the commercials roll. Less than 10% of Prime members said they plan to pay the extra 3 bucks per month to avoid watching ads, according to a survey fielded by CivicScience. MoffettNathanson’s model assumes about 15% of Prime Video users will pay the extra monthly fee.

In 2025, the size of the U.S. connected TV and ad-supported VOD market will be about $16 billion, per MoffettNathason’s estimates. That will be led by Amazon at $4 billion (inclusive of $1.7 billion from ads on core Prime Video) followed by Disney’s Hulu at $3 billion, NBCUniversal’s Peacock at $2.3 billion, Roku at $1.9 billion, Paramount Global’s Pluto TV and Paramount+ each at $1.1 billion, and Fox’s Tubi at $1.1 billion.

“We forecast Amazon and Disney being neck-and-neck for largest drivers of AVOD ad-revenue,” the firm’s analysts wrote.

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