Amazon is closing Freevee, the free-to-watch, advertising-supported streaming service, folding it into the subscription-based Prime Video product, according to people with knowledge of the matter.

Amazon plans to move some of the employees and programming from Freevee to Prime Video, according to the people, who asked not to be identified since the changes haven’t been announced. Due to contractual prohibitions, some shows have to remain in a free format, and Amazon is working on ways to continue to deliver them on its main website.

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The service launched in 2019 as a spinoff of its IMDb movie data site. The site gained some traction with original programs, such as Bosch: Legacy, based on the popular Michael Connelly police detective series. Earlier this year, Amazon began to examine the cost of programming across its entertainment portfolio after releasing several pricey series that failed to connect with audiences.

Prime Video is included with Amazon’s delivery service, which costs $14.99 a month for an ad-supported version. The company has been building out its online advertising business. An ad-free version of Prime Video is available for an additional cost.

Free-to-watch streaming services have been popular, with some, most notably Fox Corp.’s Tubi, Paramount Global’s Pluto TV and Roku Inc.’s Roku Channel, enjoying strong growth. While the free services typically rely on a lot of older movies and TV shows, consumers do seek fresh programming, which can be expensive and risky for the operators.

Under CEO Andy Jassy, who took charge in 2021, Amazon has been on a cost-cutting drive that has shut down dozens of duplicative or unprofitable initiatives, from a would-be home delivery robot to niche cloud-computing services. He’s also closely examined some of the frugal company’s big-spending divisions, including its devices business and Amazon Studios. 

—Bloomberg News