The UnitedHealthcare assassin isn’t the only one going down. So are streaming CPMs… (*Ducks*)
In January, Amazon launched its ad-supported tier for Prime Video, auto-enrolling around 70 million existing subscribers into its new ad-based model. Subscribers who wanted to keep ad-free had to opt in and pay another $3 per month. With the move, Amazon entered an already competitive AVOD market with massive scale, strong content, and a unique asset in its first-party shopping data, immediately making it an attractive option for brands (better data = better targeting).
Amazon wasn’t done, however, as they also aggressively competed on price. At launch, its CPMs were in the mid-to-low $30s, much lower than Netflix’s, which initially targeted CPMs around $65 for its AVOD launch, but settled into the $40s by January 2024. Amazon’s pricing, combined with the sudden glut in inventory, put pressure on other platforms to lower their CPMs, according to new data from EMARKETER. As a result, industry-wide CPMs for top streaming and AVOD platforms have “plummeted.”
Per EMARKETER, Netflix and Disney+ saw the steepest drops at 26.3% and 27.6%, while Max saw a 10.3% decrease. Prime Video and Peacock saw declines of 20.5% and 13.2%. Only Hulu CPMs kept relatively stable with “just” a 2.8% reduction. EMARKETER expects that downward pressure to continue into early 2025, though the rate of decline should moderate.
Why This Matters:
For fun, we took the EMARKETER data and used AI to project what the CPMs could look like into early 2026. Here’s what the Amazon-backed Claude spit out:
The AI assumed the downward pricing will continue but stabilize, with an average quarterly decline of 3%. The AI also “believes” Netflix and Disney+ will continue to see the steepest drops, though less dramatic than before. Max is expected to maintain its position with the highest CPMs, while Hulu will remain steady at the lower end of the market. Notice that the price gap between premium and value platforms is set to narrow, overall.
Thinking bigger–ultimately, the contraction in CPMs could fast-track the shift from traditional TV to CTV. As the market stabilizes and becomes more efficient, we may also see a shift in how streaming services compete for ad dollars, leading to better ad formats (we’re seeing that happen already), targeting capabilities, or viewer experiences to stand out and keep advertisers interested.
Experts React:
In June, Mark Douglas, CEO of MNTN, shared some blunt thoughts: “Amazon knows how to gain market share, and they know how to use price to gain market share.”
Our Take:
Keep in mind, these streamers aren’t the only game in town. From Fubo to Tubi to Paramount+, maybe even Chic-fil-A (they say no ads but, come on, who knows how long that will last), there is incredible competition in ad-supported streaming. As the competition grows, prices will drop. This is good for brands, but that can sometimes run up against the user experience (more ads, longer breaks, etc.).
