Amazon Prime Video’s upfronts reportedly beat internal expectations: BofA

Investing.com -- Amazon (NASDAQ:AMZN )'s Prime Video streaming service surpassed its goal of $1.8 billion in upfront advertising commitments for 2025, according to a recent report from The Information.

The achievement reportedly exceeded Amazon's internal expectations and marks a significant step forward for the platform's advertising business, according to Bank of America analysts in a note Monday.

Despite Prime Video only serving ads for the past nine months, advertisers seem to be seeing strong returns on their investments, BofA noted.

The analysts highlighted Prime Video's large ad-supported user base of approximately 115 million U.S. viewers, an expanding content slate, including a $1.9 billion annual deal for NBA games, and advanced data and measurement capabilities integrated with Amazon's retail platform.

While Amazon's upfront commitments for streaming are impressive, the bank says they still trail behind larger players like Disney and NBCUniversal, which generated $9 billion and $7 billion in upfronts, respectively, in 2022.

Even YouTube, which has made significant strides in TV viewership, reportedly expects to generate around $7 billion in upfronts for 2024.

BofA sees significant growth potential for Amazon's ad business. They estimate that Prime Video could be on track to generate $3.5 billion to $4 billion in ad revenue for 2025, accounting for 5-6% of Amazon's overall ad revenue forecast for the year.

The analysts had previously estimated that Prime Video could reach $4.6 billion in ad sales by 2025.

Furthermore, BofA believes Amazon's continued investment in live sports, including a $1 billion per year deal for Thursday Night Football, positions the platform to further increase engagement and ad sales.

The bank remains "constructive" on the future growth of Prime Video's ad business, maintaining a Buy rating with a price target of $210 on Amazon shares. They stated, "Amazon appears well on its way to building an effective streaming ad platform."

Source: Investing.com