Amazon Prime Video will be sued for misleading advertising

Amazon Prime Video's new ads have raised a massive backlash. Now, a group of subscribers have filed a lawsuit against the company founded by Jeff Bezos for alleged "misleading" advertising.

The main accusation lies in Amazon's allegedly deceptive strategy. Specifically, these customers have alleged that, for years, Prime Video has been promoted as an "ad-free" platform, so they have criticized that the new plan with ads "goes against that approach with which they have sold their service for years", an aspect that could be considered as "misleading" advertising.

Despite the fact that Disney+ or Netflix already have plans with ads and spots in their subscriptions, it has been Amazon that has received a lawsuit in this regard.

Recently, Amazon communicated through an email sent to its subscribers that, as of January 29, 2024, it would start showing ads in the current subscription, at least in the United States. In this context, the company detailed that users could avoid ads if they pay an extra monthly fee. This extra remains in the United States at $2.99 per month for the Prime subscription or a total of $9 for the dedicated Prime Video subscription.

Ads on Prime Video have arrived first, in addition to the United States, in the United Kingdom, Germany, and Canada and, by the end of 2024, in other countries such as France, Italy, Spain, Mexico, and Australia.

Amazon's goal, for the time being, is to offer significantly fewer ads than cable TV and other streaming platforms. In this regard, in its press release, the company reiterated that the amount of ads shown will be significantly lower than what we are used to seeing on cable TV.

The issue with subscription services 

Following a report by FastCompany based on a previous report by CNBC, the price increase for streaming services is derived from years of heavy investments from media companies, which poured billions of dollars into streaming to both catch up with Netflix and future-proof their business as consumers are increasingly abandoning traditional pay-TV services.

Under pressure from Wall Street, Disney and its industry compatriots have decided that the days of cheap streaming are over—unless you’re willing to watch ads, that is.

Disney is not increasing the cost of the ad-supported Disney+ plan, which is priced at $7.99. The ad-supported plans of Hulu and Max also stayed the same, while other services increased the subscription fees of their ad-supported plans at a slower rate than their ad-free offerings. 

Netflix even got rid of its basic $9.99 ad-free plan altogether in July, forcing new subscribers to make a stark choice: Either pay $15.49 per month for an ad-free viewing experience or pay just $6.99 for the company’s newly launched ad-supported plan.

Steep price hikes for ad-free streaming to steer consumers towards ad-supported plans, and that gambit appears to be working. 

Disney CEO Bob Iger told CNBC in July that 40% of new Disney+ subscribers now opt for the service’s ad-supported plan. Iger professed that this number was higher than he had expected, adding that “advertising will be a significant factor” in the company’s streaming business going forward.