Comment by heads | Hacker News Reader

Comment by heads | Hacker News Reader

How comparable is $3 a month to the ad revenue they might make from the shows?

Apparently Amazon Prime accounts get a median of 300 minutes per week of view time. That’s 20 hours of TV a month with (in the order of) a few hundred ad slots I am paying to not have to watch. Amazon are making a penny per unwatched-ad from me.

Contrast with broadcast TV: Good Morning Britain wants £4k for an ad slot in a show that has 500k to 800k viewers so that’s a CPM also in the order of a penny [edit: ahem, £5, not a penny] paid for by the advertiser, for 1000x views.

So, even taking into account Amazon’s targeted ads vs broadcast TV ads, they can indeed make a lot more money from withholding ads than if they show them?

We could call their bluff. Maybe they don’t have any ads to actually show for which advertisers are willing to pay significant fee. But if the business model is to get consumers to pay Amazon to make the pain go away then they’d probably just show 90 seconds of screaming at the start, middle and end of every episode of The Boys.

Good Morning Britain is getting around $6.36-10.18 CPM by your numbers (£5-8 per thousand viewers) which seems reasonable. If Amazon stuffed ads the way most American broadcast channels do, they could get around 720 ads in there which would be $4.58-7.33/mo at the ad rates of Good Morning Britain (American broadcast TV has an egregious number of ads). Assuming fewer ads (Hulu and Netflix show about 5 minutes per hour) that would be 200 ad slots worth $1.27-2.04/mo.

So, it's likely that Amazon is making a little more from those who pay to skip ads, but it's in the ballpark. Plus, the people advertisers want to reach are the people with the disposable income to pay to skip the ads. They don't want the cheap people who are willing to waste nearly two hours of their life a month to save $3.

I think you might have miscalculated the CPM since you've said "that’s a CPM also in the order of a penny." It's on the order of a penny per viewer, but not per thousand viewers. That's probably why you think it's more of a bluff that could be called. It is likely more revenue if you pay to skip ads, but Amazon would probably end up making $2 from you watching ads.

Thanks for checking my math and for doing a second run at it. I’ve edited to point out my mistake. It feels like there’s a mismatch but my numbers are pretty hand wavey so I can imagine it could be a lot closer than that.

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