Amazon (AMZN) entered the ad-supported streaming space in January by defaulting all of its Prime Video subscriptions to ads. Just six months later, the tech giant's impact is already being felt.

Prime Video subscriptions now automatically default to the ad-supported tier at current monthly rates of $14.99 for Prime delivery members and $8.99 for non-Prime members—or those who only subscribe to the standalone video service. Subscribers who want the ad-free version will now see their monthly bill go up by $3 a month.

Amazon's entrance builds on the presence of Netflix (NFLX) and Disney (DIS), which introduced their respective ad tiers in late 2022. That means an already accelerated expansion of ad-supported options for consumers — along with prospective ad buyers.

"There's no question it has created an excess of supply in the marketplace," Rita Ferro, Disney's president of global advertising, told Yahoo Finance earlier this week at Cannes Lions, an annual event for the global advertising and communications industry.

Bottom line: companies like Disney must work that much harder to lure advertisers to their platforms.

MoffettNathanson estimated Prime Video could add over 50 billion impressions to the connected TV (CTV) market this year, "an amount that is likely to dwarf a lot of the smaller players in the space" as increased inventory simultaneously drives down the price for ads.

"Amazon knows how to gain market share and they know how to use price to gain market share," said Mark Douglas, CEO at MNTN, an ad tech company that specializes in the CTV space. "That's one of the big things this week [at Cannes] — Amazon is being pretty aggressive in terms of lowering price."

Ad buyers have paid Amazon a reported cost per thousand, or CPM rate, between $30 and $35. The low price has forced competitors to follow suit. Netflix dropped its CPM rate from a previous $39 to $45 range last summer to roughly $29 to $35 currently, according to the Wall Street Journal.

"Why they can do that and the rest of the industry considers that a problem is because Amazon has [a] big search advertising business and they can bring those advertisers over into Prime," Douglas said. "They can monetize the content way better and bring down the price. That is the main dynamic at work right now."

'It just raises the stakes'

Amazon has one of the broadest audience reaches of all the streaming platforms due to its Prime delivery service and ability to keep consumers within its ecosystem. That's helped the company easily secure customer data and increase its targeting capabilities — both attractive to advertisers.