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LOS ANGELES, CALIFORNIA – MAY 2: WGA members take a selfie before heading to the picket line on May 2, 2023, in front of Paramount Studios in Hollywood on the first day of the strike. The union signed a new three-year contract to replace the one that expired Monday night with a major studio that failed to reach a last-minute deal. (Genaro Molina/Los Angeles Times via Getty Images)
Gennaro Molina | Los Angeles Times | Getty Images
Media companies pitching to advertisers this week will have to do their best to overcome a lot of the noise within the industry.
The advertising market has been sluggish since last summer, and companies are working to cut costs to improve the profitability of their streaming business.
Meanwhile, the Hollywood writers’ strike is sure to add to the story, especially if Pickett shows up this week outside of the annual ad sales event known as Upfront. Some of them were already at the so-called Newfronts, a similar event focused exclusively on streaming.
This week begins with comcast‘s NBCUniversal Upfront has closed at the last minute after global advertising head Linda Yaccarino stepped down last week, after Twitter hired her as CEO to replace owner Elon Musk. A few changes were made.
Fox Corporation, disney, warner bros discovery and a newcomer Netflix We will be holding an event this week as well. Paramount Global This year, it opted out of Upfront in favor of intimate dinners with advertisers.
Streaming remains a major topic of discussion, especially as the ad-supported tier becomes more important as subscriber growth slows.
And with media companies leaning toward proven series and movies that keep viewers on their toes, franchise content is likely to be a big deal.
Let’s take a look at what’s planned for Upfronts here.
Writers Strike Concerns
Member of the American Writers Guild quit his job earlier this month and headed for the picket line, which halted film and TV production.
Media executives say the strike won’t have an immediate impact on programming, but that could change depending on how long the strike lasts.
Amy Leifer, chief advertising sales officer at DirecTV, said: “There’s certainly an added element of liquidity this year, like the WGA strike, and that’s a top priority for advertisers, and the Flexibility has become even more important.” “We know that even if scripted TV production stopped due to the writers’ strike, viewers would still consume TV content.”
A longer strike is likely to lead to a greater emphasis on live content such as sports and news. Fox CEO Lachlan Murdoch said he doesn’t expect the writers’ strike to affect the company, given the company’s sports and news-heavy content.
While this will help traditional media companies with strong sports and news offerings such as Fox, Warner Bros. Discovery and NBCUniversal, it could weigh on entertainment-only networks as well as streaming services. be.
A scene from Season 4 of Netflix’s Stranger Things.
Provided by: Netflix
Already, Netflix’s “Stranger Things,” Disney and Marvel’s “Blade,” AppleTV+’s “Severance,” Paramount’s “Evil,” and many others have been put on hold.
An immediate concern for Upfront, however, may be if picketers stick around before the event. Many of Hollywood’s top talent, especially the hosts of late-night talk shows whose shows have already been canceled, have expressed their support for the writers. Often these comedians and talk show hosts join up front.
The recent New Front featured picketers at the front of the event. Netflix is hosting his Upfront this week for the first time since it recently introduced an ad-supported tier.reportedly selected Keep your presentation virtual only.
soft advertising market
Media executives across the board aren’t as bullish on the advertising market as they were a year ago.
“It feels like a party here,” said NBCUniversal CEO Jeff Schell at the time. said at last year’s Cannes Lions advertising conference, held just over a month after the pre-presentation. “I don’t know if it’s because most of you are out for the first time in a while, or because you’ll be in the south of France in June, but no, I don’t feel the market is going down.”
By November, the ad market had collapsed due to skyrocketing interest rates and fears of a recession.
“The ad market is very weak,” Warner Bros. Discovery CEO David Zaslav said at an investor conference in November. “We are weaker than during Corona.”
In recent months, management has pointed to a limited recovery.
“The whole entertainment advertising market is in a tough spot,” Disney Chief Financial Officer Christine McCarthy said at Disney’s second-quarter earnings call last week. “Although the weakness has eased somewhat, we expect some softness to continue in the second half of the year.”
NBCUniversal, Paramount Global, Warner Bros. Discovery and Disney all reported a 6% to 15% decline in TV advertising revenue in the first quarter.
This year, the message media executives are sending to advertisers is likely to put value at the heart of it, especially as companies continue to offer more content on their streaming services. Warner Bros. Discovery introduces Max, a new HBO Max-Discovery+ combination product launching later this month. Disney announced last week that it would be adding the ability to watch Hulu shows within Disney+, but CEO Bob Iger said the change would be introduced later this year and “provide greater opportunities for advertisers. I will do it,” he said.
Cost reduction
Media executives will try to convince advertisers to maximize their spending, but they will drive the narrative while reducing the number of shows. Disney announced last week that it plans to produce less content next year.warner bros discovery Over the past year, we’ve been removing content from Max to reduce costs.
“It’s important to streamline the amount of content you create and how much money you spend producing that content,” said Disney’s Iger.
Cost-cutting efforts are driven by an urgent motive to make streaming profitable. Paramount Global, NBCUniversal and Disney have all pledged to stop streaming losses by next year. Warner Bros. Discovery announced earlier this month that its U.S. streaming business will become profitable in 2023, a year ahead of schedule.
“The point here is that the US streaming business is no longer the cause of the bleeding,” Zaslav said. “It’s hard to run a business when you have a lot of bleeding.”
Still, the upfront is the time to showcase your content. If the investor’s message centers on cutting fat, the ad buyer’s message focuses on showcasing the quality of the existing franchise.
Franchise frenzy
If one thing is certain, media networks and their streaming media will showcase franchise-focused productions.
It is also the theme of the up front in recent years. On last year’s NBCUniversal Upfront, late-night show host and Saturday Night Live alum Seth Meyers jabs about the spinoff and reboot schedule.
“It goes without saying that the last two years have been transformative, not just for the TV industry, but for every industry. It’s a way of “paying up front,” Myers said last year. “That doesn’t mean NBC isn’t embracing the future. Next year will see exciting new shows like ‘Law & Order’, ‘The Fresh Prince of Bel-Air’, ‘Night Court’ and ‘Quantum Leap’. Ideas are promised.”
Parrot Analytics data shows that franchises are attracting broad audience demand for both Hollywood movies and TV series, which are an important part of programming for streamers such as Disney+, Paramount+ and Peacock.
“Hollywood has been recycling for the last 12-13 years because other content didn’t break out,” said Brandon Katz, entertainment industry strategist at Parrot.
The logo of streaming service Paramount+ on the logo wall at the Paramount+ launch event. (Recrop) Streaming service Paramount+ is now available in Germany.
Jorg Carstensen | Picture Alliance | Getty Images
We can see that Paramount relies heavily on franchises, especially on its own streaming service, Paramount+. According to Parrott, Star Trek series content accounted for 32.4% of U.S. audience demand for Paramount Plus in 2022, while Yellowstone spin-offs accounted for 11.4%.
Last week, Paramount-owned CBS broadcast network announced three new series for the upcoming season. One is “Matlock,” a reboot of the late 1980s and ’90s series starring Academy Award-winning actress Kathy Bates, and the other is “Elizabeth.” Based on characters from the “Good Wife” and “Good Fight” series.
Disney+ has relied heavily on series derived from the Marvel and Star Wars libraries. However, Parrot Analytics has found that U.S. demand for Marvel content is declining in late 2022, possibly because recent series have received mixed reviews.
Transition to streaming
Ad-supported streaming will be an even bigger part of the story this year.
As code cuts accelerate, Wells Fargo analyst Steven Kahal said total pay-TV subscribers were down 3% in the quarter, an “overall deterioration.” , digital advertising is likely to occupy a larger pie.
“The trend is very clear that linear TV continues to decline and digital video and connected TV are on the rise to fill the gap,” said Paul Verna, principal analyst at Insider Intelligence. Verna added that advertisers are expected to spend $12.48 billion on digital media during this year’s Upfront and Newfront periods, up 28% from last year.
U.S. TV ad spending during the upfront period is expected to fall 3.6% to $18.64 billion in the 2023-24 season, according to Insider Intelligence, while more dollars go digital. And it’s evidence that the market has stopped growing on the traditional TV side.
Netflix and Disney+ launched ad-supported tiers of their services late last year. With streaming subscriber growth stagnating and companies working to make streaming more profitable, executives hope cheaper options will retain or lure customers.
Disney recently said it relies on ad-supported options to make money on its streaming service. The company Adding Hulu content to Disney+ is “a logical evolution of our DTC service that offers greater opportunities for advertisers,” Iger said.
Raising the prices of ad-free options to increase the revenues of these companies could also entice customers to cheaper options with ads.
Paramount+ and NBCUniversal’s Peacock have each offered an ad-supported tier since launch. Peacock hosted a New Front presentation to showcase its own content, but the streaming service will be a key part of Monday’s NBCUniversal upfront.
“Just a year ago, if you looked at the composition of Paramount’s ad revenue, about 25% was going digital,” said David Lawenda, Paramount’s chief digital advertising officer. “Now it’s about 40%, which means 40 cents on every dollar spent digitally.”
Free, ad-supported platforms like Paramount’s Pluto and Fox’s Tubi will also see more ad dollars pour in.
“We look forward to having Tubi as a key player in our pre-negotiations,” Murdoch said at a recent Fox earnings call. “This is clearly not only a strategic driver for us, it will continue to be an important driver.”
These free, ad-supported streaming TV (FAST) services are experiencing explosive growth. It also saw an increase in viewership during a time when production was halted and new content was scarce in the midst of the pandemic. If the writers’ strike continues, the same situation may occur again.
Disclosure: NBCUniversal is the parent company of CNBC.
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