Proactive Investors - Amazon.com Inc (NASDAQ:AMZN) has exceeded internal expectations by securing more than $1.8 billion in upfront ad commitments for its Prime Video service, Bank of America (NYSE:BAC) said in a note on Monday, as the tech giant ramps up its presence in the streaming ad market.
The commitments, which include video advertising for Prime Video and live sports, position Amazon to generate between $3.5 billion and $4 billion in Prime Video ad revenue by 2025, the bank estimated.
Upfront ad sales are typically secured ahead of future seasons of TV programming and are viewed as a key indicator of future revenue.
The streaming service, which started serving ads just nine months ago, has gained traction with advertisers, Bank of America analysts noted, adding Amazon’s growing content library, including a deal to stream NBA games starting in 2025, as well as innovative ad formats and data capabilities integrated with its retail platform, have made it an attractive option for marketers.
While Amazon's early advertising ramp-up has been slower than some initial projections, the company's strong upfront showing suggests increasing advertiser confidence, analysts said.
Despite the growth, Amazon still trails streaming rivals in the ad market. Disney and NBCUniversal generated $9 billion and $7 billion, respectively, in upfronts in 2022, according to the report. However, analysts noted that Amazon has substantial room to expand its ad business.
Amazon has committed billions to building out Prime Video’s content, including a $1 billion per year deal for Thursday Night Football and a $1.9 billion per year deal to stream regular-season NBA games starting late next year.
Analysts maintained a Buy rating on Amazon’s stock, with a price target of $210.