The free tier will complement Amazon's ad-free, on-demand Prime Video service that is included with an annual $99 subscription to Amazon Prime, which provides free shipping, deals, and other perks to its online shoppers.
Amazon is reportedly in talks with TV networks, movie studios, and other media companies about programming for the service.
For the ad-supported service, Amazon wants to dive into back catalogs of TV and movie studios, looking to beef up its children's programming, for example, one TV industry insider says. It is also going after lifestyle, travel, cooking and other shows that are a good fit for an e-commerce platform.
Amazon, which is reportedly already estimated to have spent almost $5 billion on content by the end of the year, is said to be doubling down on its content efforts as Apple and several other tech companies push into original programming.
Last week, for example, Apple reportedly outbid Netflix for a new TV show that will star Reese Witherspoon and Jennifer Aniston. The series is said to revolve around the lives of morning talk show hosts, based on journalist Brian Stelter's book Top of the Morning: Inside the Cutthroat World of Morning TV.
Apple's push into original content is being led in part by former Sony executives Zack Van Amburg and Jamie Erlicht, who joined the iPhone maker back in June. Van Amburg and Erlicht are known for their work on many popular TV shows, including Breaking Bad, The Crown, and Better Call Saul.
Of note, Amazon Prime Video is still not available for the Apple TV. Apple said the app will be released by the end of 2017.