Amazon is reportedly seeking advertising commitments in the millions of dollars for new channels that will feature ad-supported video content on its Fire TV connected-TV devices, per Cheddar.

most popular streaming services span svod, live tv, avod, and social platforms
most popular streaming services span svod, live tv, avod, and social platforms
Business Insider Intelligence

Similar to the Roku Channel , Amazon will lean on media company partners to fill out the new ad-supported channels.

What it means: Amazon's aggressive push into video advertising will likely give the companys red-hot ad business an additional boost: Amazon made $10.1 billion in ad revenue in 2018, up 115% year-over-year (YoY).

  • Amazon is confident that ad-supported video on Fire TV will find audience.In its pitch, Amazon is asking advertisers to spend as much as they would on a large cable network despite the fact that these new content offerings arent yet available to consumers. But advertisers tend to go where the eyeballs are, or where they will go: Amazon would commands eyeballs from among some 30+ million Fire TV device owners.
  • This would represent possibly Amazons biggest bet on ad-supported video so far.Amazon already makes money from ad-supported video content, including from NFL content and other content that runs with ads on Prime Video and Twitch, and additionally through its new IMDb AVOD platform called Freedive. But this offering could potentially scale viewership much faster from among a more captive and engaged addressable base, and command more TV-like spend commitments from advertisers.

The bigger picture: We've discussed Amazon's potential to take ad dollars from the duopoly, but its latest move highlights the potential for its ad business to disrupt a different set of players as well: Roku and traditional TV networks.

Amazon will compete directly with Roku for these ad dollars.Rokus platform revenue which largely consists of advertising now exceeds hardware revenue, a feat it achieved within less than a year. Rokus ad revenue has grown at a rapid clip, rising 77% YoY in Q4 2018 versus the prior year period to $151.4 million, versus just $85.4 million the year before.

But, as of this year, Amazon's addressable market is bigger: It counts 30 million Fire TV device owners versus Roku's 27 million. Presently, it's likely that most of Amazon's ad revenue stems from display ads on its platform. But given its captive audience and the precedent of Roku's speedy video advertising growth the e-tailer could soon see video account for a greater proportion of its ad revenue.

Ultimately, Amazon could also compete with television for ad dollars.Amazon could feasibly tap the roughly $70 billion TV ad market with the offering: More TV advertisers could choose to shift spend to digital channels in a bid to reach cord-cutters or cord-nevers who are more likely to stream content via connected-TV devices.

Amazon isnt the only tech giant prowling outside the gates of the traditional TV ad market: Last month, Facebook said that it would present its premium video fare at the upfronts for the first time this year the annual confab where TV networks hype their programming to advertisers and aim to land spending commitments through the upcoming year. But unlike Facebook, Amazon is likely to benefit from Fire TV being a highly curated, brand safe environment particularly as Amazon embarks on dealmaking with media partners.

Interested in getting the full story? Here are two ways to get access:

1. Sign up for the Digital Media Briefing to get it delivered to your inbox 6x a week. >> Get Started

2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Digital Media Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

See Also:

SEE ALSO: THE SOCIAL VIDEO REPORT: How social platforms are transforming their video distribution strategies and creating new opportunities for brands