The main draw for Amazon is the advertising revenue that such a service would bring in. While Amazon is now the third-largest digital advertiser, it's still well behind Google and Facebook in that space, and an ad-supported streaming service could help the company capture more of that market. The new service will reportedly allow for ads both in between content and wrapped around an embedded video player, and advertisers will be able to target their ads using Amazon's proprietary data.

The service will reportedly be announced as part of Advertising Week.