Likewise, the marketing budget dedicated to promoting Freevee has come under scrutiny amid a larger effort from Amazon to reduce expenses. The company conducted layoffs in January across Prime Video and the streaming service Twitch.
The Freevee app also lacks a streamlined means to convert its viewers into subscribers, according to two people familiar with the matter.
Viewers consuming free, ad-supported content on Prime Video encounter its paywalled options and can be upsold into Prime subscribers, which are more valuable than Freevee viewers because the former contribute two sources of revenue.
“Prime Video wants the customers who are only interested in free because they think they might be able to convert them,” said a person familiar with the matter. “They were not going to be able to convert them from Freevee.”
Laying the groundwork for months
Amazon introduced ads to Prime Video less than 30 days ago, and the company is actively monitoring consumer feedback and rates of churn to determine the success of the initiative, according to three people familiar with the matter.
Based on this data, Amazon might delay closing Freevee if customers revolted, or if too many of them opted to upgrade to the ad-free tier, according to two people familiar with the strategy. If the latter happened, Prime Video could find itself unable to meet the inventory quotas it has promised advertisers, forcing it to delay the closure.
So far, neither concern has materialized.
Freevee is not long for this world.
Anonymous source
Internally, Amazon has been laying the groundwork for this decision for months, according to two people familiar with the matter.
Last summer, Prime Video staff began exploring ways to better migrate Freevee viewers to Prime Video, and in August it began pulling technical staff from Freevee to build out its ads infrastructure. When Amazon conducted layoffs in January, the Freevee marketing and strategy staff were particularly hard hit, and the service has seen two of its three directors migrate to Prime Video, according to sources.
Once Prime Video subsumes Freevee, it will use Freevee content as its “front porch” to lure in potential customers, according to two people familiar with the strategy.
The ad-supported subscription service will continue as it is today, but the premium, ad-free tier might soon feature more perks, such as Dolby Atmos audio, to entice subscribers to upgrade.
“Freevee is not long for this world,” said a person familiar with the matter.
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