Tech News : Amazon Prime Video : Pay To Remove Ads

Amazon has announced that from 5 February 2024, its Amazon Prime Video customers in the UK and Germany will see “limited” ads unless they pay £2.99 per month to remove them.

Why? 

Amazon says that in view of the fact it won’t be making changes in 2024 to the current price of Prime membership, and that it will continue investing in content and keep increasing that investment over a long period of time, it will be adding the “limited” adverts that customers must pay to remove.

In the announcement about the pay-to-remove ads, Amazon listed the many benefits of the Prime Service, and its heavy investment in the service. More specifically, it’s also likely that its renewals of hit series like Redemption and The Boys, its deal with Games Workshop (bringing Warhammer 40,000 to cinema screens) and its plans for other popular content like a series based on the video game Fallout, may also be used to balance out the cost/value analysis in the minds of customers.

The online retail and tech giant and streamer is also keen to stress that it will “have meaningfully fewer ads than linear TV and other streaming TV providers.” 

That said, live content such as sports will continue to include advertising whether customers pay for Prime ad removal or not.

Ad-Free Option Later 

Amazon has also said that it will be adding a new ad-free option but will share the price of that option at a later date.

How And When? 

Amazon says no action is required for Prime members as the “gradual” rollout of the ads takes place and that it will email Prime members several weeks before ads are introduced into Prime Video. The email will also contain information on how users can sign up for the ad-free option and will, presumably, give the price of the ad-free service.

More Expensive Than The US And Germany

Although customers in the US and Canada will see ads rolled out earlier than in the UK (from 29 January), at US $2.99 (£2.35) to stop the ads, this works out cheaper than for UK customers.  It is also understood that customers in Germany will have a better deal by only having to pay the equivalent of Germany will pay £2.60.

Competitors  

Amazon Prime’s competitors, Disney+ and Netflix, have also introduced their own cheaper ad-supported memberships (and price rises). For example, back in August 2023, Disney+ announced its plan to introduce a cheaper streaming option with adverts in the UK in November (due to falling profits). Also, it was back in November 2022 when Netflix launched its ‘Basic with Ads’ streaming plan.

What Does This Mean For Your Business? 

For Amazon Prime, adopting the limited ads that require payment to remove them idea provides an extra revenue stream which could be used to contribute to its investment in content creation thus enhancing the platform’s offerings and competitiveness.

The email to be sent to customers about the ads also provides Amazon Prime with an opportunity to get customers’ attention and highlight its ad-free option in a more ‘under-the-radar’ way in what is a highly competitive streaming market.

Since the boom-time of the pandemic when streaming services were prioritised and multiple users per account tolerated, the post-pandemic saw user numbers drop, e.g. for Netflix. This led to the leading streaming platforms having to increasingly explore varied revenue models, including ad-supported tiers in order to offer more attractive and diversified subscription options to retain and attract a broader subscriber base in this highly competitive space. Amazon Prime, therefore, like Netflix and Disney+, is now offering ad-free options to increase user numbers and attract this broader range of customers (more price-sensitive viewers) thereby intensifying the competition among streaming services.

However, although Amazon Prime’s move could provide new revenue opportunities, it also presents challenges and choices for customers, who now must weigh the trade-off between tolerating ads or paying more for uninterrupted viewing, thereby potentially unsettling them and lowering barriers to exit. As Amazon’s announcement about the change shows, it’s hoping that its commitment to a lower ad volume compared to other platforms could mitigate some potential viewer dissatisfaction and that reminding customers of the many benefits of its services may soften the blow.

Amazon’s business-changing model for streaming is, therefore, an expected reflection of the changing landscape of the highly competitive streaming services market, as providers continuously adapt their strategies.

Tech News : UK Joins Amazon’s Fast Drone Delivery Expansion

Amazon has announced that it will be expanding its ultra-fast Prime Air drone delivery operations to the UK, Italy and also to an as yet unnamed US city by the end of 2024.

Prime Air Drone Delivery

Amazon Prime Air is a service is intended to (safely) deliver packages to customers in 30 minutes or less using unmanned aerial drones. The unmanned (UAV) delivery drones, which fly at altitudes below 400 feet, use advanced sense-and-avoid technology to safely navigate the airspace and deliver the package to the intended location. As well as being convenient and fast, particularly in areas of road congestion, using these electric drones is also one way that Amazon hopes to reduce the carbon footprint of its package delivery and contribute to its goal of net-zero carbon emissions by 2040.

Using Drones For More Than A Year 

Amazon’s Jeff Bezos first revealed his plans for a drone delivery service back in 2013 and Amazon Prime Air completed its first fully autonomous drone delivery as far back as December 2016. In 2020, Amazon received approval from the US Federal Aviation Administration (FAA) to operate its fleet of Prime Air delivery drones, and Amazon says that it’s been using drones in the US to safely deliver customer packages weighing up to five pounds in one hour or less, for almost a year.

The company says the new locations (i.e. the UK, Italy, and a third city in the US) will add to its existing opt-in drone delivery operations, and that Amazon’s goal is to deliver 500 million packages on autonomous aircraft by 2030.

Regulators 

However, in order to expand its drone network, Amazon will need to satisfy the European regulator which it has found a challenge in the US, such as satisfying the FAA that the drones can operate an autonomous safety-critical system over densely populated environments within the busy US national airspace. As such, and with several test crashes, it was reported that by May this year, Amazon had only completed 100 deliveries in two small U.S. markets compared to Walmart backed DroneUp which reportedly made more than 110,000 deliveries in the US. Therefore, Amazon will need hundreds of incident-free flights to satisfy regulators and expand its services. Also, in the US, there have been some reports of low signups to drone delivery services.

For its new UK, Italian, and expanded US drone service, Amazon says it’s been working closely with national regulators and international regulators, has committed the right resources and has the right technology and infrastructure in place to make its service scalable, convenient, and safe.

Better Drones 

Amazon has announced that its UK and Italy Prime Air delivery service will be undertaken using its new MK30 drone design, which it says is “quieter, smaller, and lighter, than previous models” and can fly twice as far as previous Prime Air drone models, thereby reaching customers further from fulfilment networks. The MK30 drone features ‘best of both worlds’ design as its tiltrotor system means it can take off like a helicopter and transition into horizontal wing-borne flight once in the air.

Other Improvements 

Crucially, for UK flights, Amazon says the MK30 can “fly in more diverse weather conditions” with the package held inside the drone to protect it. Also key to this operation is that the MK30 is equipped with “sense and avoid technology” so it can avoid obstacles in the delivery area. Some of the problems with Amazon’s previous drone models were that they required site surveys to find landing spots with trimmed grass, requiring people, pets and objects needing to be 5 metres away. The hope is that the new MK30 drone (regulations allowing) will be able to operate more safely in tighter and more varied spaces.

Humanoid Robot Announcement 

In addition to announcing its new drone services, Amazon has also announced that it will be testing Agility’s bipedal robot ‘Digit’ (a humanoid robot with arms, legs, and a head) in its warehouse facilities. This marks a substantial change from its many wheeled and robot-arm style robots. Amazon already has a staggering 750,000 autonomous mobile robots (AMRs) deployed across the company’s warehouse network, but a walking humanoid design is a first. It is thought that humanoid-style robots will be well suited to workspaces built for humans (shelves and stairs), and that it could have wider scope than just being used for parcel-picking, thereby expanding future possibilities.

What Does This Mean For Your Business? 

Amazon’s wealth, power, scale, and scope as a business has allowed (and perhaps required) it to experiment more with automation that improves both its productivity and efficiency (i.e. robots) and its delivery service (the drones). In addition to improving these aspects of its business, its drones and robots have been a way for Amazon to put more pressure on the competition, open up new future opportunities, offer more choice to customers (opt-in drone deliveries), learn and build alliances and partnerships, move further towards meeting its green targets (zero emission technology), and continue to grow and expand.

In the UK, parcel delivery drones flying overhead would be a new and novel development but would offer potential opportunities for businesses trying to offer customers speedy (at least same-day), secure deliveries even to difficult-to-reach locations at a time when our roads are often congested, particularly in urban areas (if the price were right).

There are regulatory hurdles to overcome, nevertheless Amazon has made the effort to create a safer and more suitable drone to meet specifications and match environmental conditions. The advantages of drones (speed, directness, cleanliness) could be appreciated and used as way to add value and provide a competitive edge to all kinds of businesses and organisations in the UK that need to deliver goods and other items very quickly.

Featured Article : Subscription Sales Scrutiny

Following the news that US Federal regulators have sued Amazon, alleging that people have been “tricked” into buying hard-to-cancel Prime memberships, we take a closer look at ‘inertia selling’.

What Happened With Amazon Prime Subscriptions? 

Back at the end of June, the US Federal Trade Commission (FTC) announced that it was taking action against Amazon.com Inc, for “enrolling consumers in Amazon Prime without consent and sabotaging their attempts to cancel”. The FTC, which alleged that Amazon had been involved in this kind of inertia selling for years, went so far to say in its complaint that Amazon had been using “manipulative, coercive, or deceptive user-interface designs” which it describes as “dark patterns,” designed to “trick consumers into enrolling in automatically renewing Prime subscriptions.” 

The FTC Chair Lina M. Khan, said in the complaint: “These manipulative tactics harm consumers and law-abiding businesses alike.” 

Denial From Amazon

Amazon issued a statement in response, denying the TFC’s allegations, saying they were “false on the facts and the law” and that “The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership.” 

Inertia Selling 

‘Inertia selling’ is a controversial sales technique which usually applies to a company sending unsolicited goods or services (or a subscription for services) to individuals with the expectation that they will buy or continue to buy the items. The idea is that the inertia of the consumer (i.e., the natural tendency of consumers to avoid taking action and stick with the default option) will mean that they either keep and pay for the item or to continue a subscription service, often without fully understanding the terms and conditions involved.

As the name suggests, this approach relies on the consumer’s inertia to drive sales, rather than obtaining explicit consent or agreement for the transaction.

Making Things Too Difficult 

In the recent complaint against Amazon by the FTC, it was alleged that making the option to purchase items on Amazon without subscribing to Prime was difficult for consumers to locate by not being clear in the transaction that in choosing that option consumers were also agreeing to join Prime for a recurring subscription. Also, the FTC alleged that when consumers tried to cancel Prime membership, they were faced with multiple steps, first having to locate the cancellation flow, and then being redirected to multiple pages that presented several offers to continue the subscription at a discounted price, turn off the auto-renew feature, or to decide not to cancel. The FTC said that only after clicking through these pages could consumers finally cancel the service. In other words, its alleged that consumers may have been tricked into consent in the first place and then the sheer complication of cancellation made consumers give up and opt for keeping the service.

Is It Illegal? 

Although these “dark patterns” (as described by the FTC) sound as though they must be illegal, it’s not quite as clear cut. Inertia selling is generally considered to be an unfair commercial practice under UK law, and it can be illegal. For example, UK consumer protection legislation like the Consumer Protection from Unfair Trading Regulations 2008, is designed to prevent unfair or deceptive practices, including inertia selling. These laws require that businesses provide consumers with clear, truthful information so they can make informed choices.

If a consumer in the UK receives unsolicited goods or services, they generally are under no legal obligation to pay for them. The law typically considers these unsolicited items to be gifts, and the consumer may not be required to return them. Also, companies must not demand payment for items that were not explicitly ordered as doing so could be considered an unfair commercial practice and may result in legal consequences.

However, for the consumer, it’s essential to carefully read the terms and conditions of any contract or agreement entered into, as there can be instances where the business has a legal basis for providing additional goods or services and charging for them. It appears, therefore, these situations can sometimes be nuanced.

Change Is Coming 

Although some areas of these practices may be nuanced, in April in the UK, the government announced that a new Bill will give the Competition and Markets Authority (CMA) new powers to clamp down on “subscription traps.” The changes will also require businesses to give consumers clearer information before they enter a subscription contract, issue a reminder when (for example) a free trial or low-cost introductory offer is coming to an end, and a reminder before a contract auto-renews onto a new term, and give consumers a straightforward way to exit a subscription contract.

In March this year, in the US, the FTC proposed a “click to cancel” provision requiring sellers to make it as easy for consumers to cancel their enrolment as it was to sign up. This change looks likely to help tackle hard-to-stop free trials, and auto-renewals (subscription traps).

In the EU, The CPC Network (coordinated by the European Commission) recently asked Mastercard, VISA and American Express to introduce a series of changes in their rules to ensure that traders provide clear information to consumers on recurrent payments before they enter into a subscription.

Others 

Inertia selling is not new but arguably, with the kind of subscription economy we now have, it may be easier for companies to use those practices. It’s worth noting that it’s not just Amazon that allegations of inertia selling of subscriptions have been made about. Other examples (and there are many more than these) include:

– Way back in 2013, when Adobe transitioned to its Creative Cloud subscription service, it received criticism about its subscription-only model and its cancellation policies.

– In 2015, Sky faced an Ofcom investigation for allegedly making it difficult for customers to cancel, e.g. cancellation requests not being “verified” without a call by the customer.

– In 2019, a Guardian newspaper report highlighted many companies which let customers sign up online but required a phone call to leave, e.g. Weight Watchers (WW), Ocado Smart Pass, British Gas Homecare, Which?, and others. The point was that requiring cancellation via phone call could be something that consumers forget.

– In 2020, the CMA took action against Roland for not making it sufficiently easy for online customers to cancel their digital piano rental agreements.

– Three, Vodafone, and EE all came under scrutiny from the CMA in the UK for the terms of their mobile phone contracts, some of which allegedly made it difficult for customers to switch providers or cancel their services.

– As in the US, gym chains in the UK have faced scrutiny for their cancellation policies. The CMA has now taken steps to ensure that gyms are transparent about their terms and conditions.

– In 2021, while the primary concerns with Viagogo (the multinational ticket exchange and ticket resale brand) surrounded ticket reselling, some consumers also complained about subscriptions that were difficult to cancel. This led to investigations and enforcement action by the CMA.

– Last year, as part of its investigation into the online console video gaming sector, the CMA identified concerns about some features of Microsoft’s auto-renewing subscriptions. For example, the CMA was particularly concerned about whether it was clear upfront that contracts would automatically renew, how easy it was to turn off automatic renewal, and whether people may not have realised they were still paying for services they no longer used.

What Does This Mean For Your Business? 

As we have moved more into becoming a subscription society, regulating all the practices has become more complicated. One of the chief concerns is how to protect consumers from business practices that essentially make the barriers to entry of a subscription contact incredibly low (or virtually invisible) and the barriers to exit extremely high through means such as excessive complication – two key characteristics of inertia selling.

In the US, UK, and EU matters such as hard-to-stop free trials, auto-renewals (subscription traps), and making consumers work hard to cancel are all being addressed with new proposed laws and new powers being given to regulators. For businesses offering subscriptions and wanting to avoid penalties, this will mean a review of their subscription process paying particular attention to clarity and options in sign-up and providing an easy way to cancel (with enough reminders along the way). Although Amazon is the latest to come under the regulatory spotlight it is by no means the only company to have been warned or had action taken against it by regulators over how subscriptions are sold, handled, renewed, or cancelled.

Although more legislation is in the pipeline and scrutiny more intense than ever, there is still some way to go in successfully tackling the many practices and nuances related to inertia selling. In the meantime, in the UK, customers who believe they have been the victim of inertia selling can report the practice to the CMA or their local Trading Standards office for further investigation.