Amazon (NASDAQ: AMZN) Prime is making a big change to its membership later this month, and while some members might not like it, investors should love it.

Starting on Jan. 29, Prime Video subscribers will start seeing ad breaks in the middle of their favorite shows like Jack Ryan and The Lord of the Rings: The Rings of Power. If they don't want to see ads, Amazon will offer the chance to upgrade Prime subscriptions to an ad-free tier for $2.99 per month.

The move follows similar ad-tier introductions from Disney (NYSE: DIS) and (NASDAQ: NFLX). Both said they've seen a lot of success with their ad-supported tiers, and Bank of America analyst Justin Post thinks Amazon can see comparable benefits. He estimates the change will add $4.8 billion in revenue for Amazon between the higher-priced tier and additional ad revenue. And since the marginal cost of introducing ads to Prime Video is minimal, almost all of that will flow to Amazon's bottom line.

Continue reading

Source Fool.com