Commentary
Will The Upfront TV Market Be Softer Vs. A Year Ago? Prime Video To Blame?
- by Wayne Friedman , Staff Writer, April 17, 2024
Upfront TV media buyers expect a soft overall marketplace again, according to all media agency executives at the MediaPost Outfront event held this week.
But the main question is: How soft?
Last year, the linear TV marketplace upfront advertising market was down 5% in total revenue volume to $19 billion, according to Media Dynamics. More could be coming.
A major piece of the puzzle comes from the decision made earlier this year when Amazon Prime Video decided to unleash its big premium streaming service with an advertising option.
That all means highly motivated and hungry premium platforms from legacy TV network companies -- including Peacock, Max, Paramount+ -- might be shaking a bit.
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Tons of new advertising inventory with the potential to reach a maximum 150 million Amazon Prime customers could severely depress already low streaming advertising prices. Estimates of around $30 CPMs (the cost per thousand 18 and older viewers) could drop into mid-teens.
So those financially on-the-edge streamers -- Peacock, Max, Paramount+, for example -- will be pushing volume not to hit up big CPM price gains but to fill big volume revenue holes to ultimately achieve steady profitability.
Now into the span of five years, legacy premium streaming launches -- starting in 2019 with services like Disney+ -- the pressure is now on for financial stability, if not growth.
What about Amazon's individual sales effort?
One media seller who attended the Outfront believed Prime Video could be under a little pressure -- possibly with the ability to make low CPM deals, waiting for the shake out in the business to come.
Considering Amazon's wide range profitable related existing businesses -- including $47 billion in worldwide advertising revenues -- it would be entirely comfortable to let Prime Video ad platform dig in slow, stable roots, while putting the kibosh on legacy TV owned streamers' fragile business.
Still, there are some positive factors going for legacy TV streamers -- perhaps some high-quality original program content tricks up their sleeve.
In addition, Peacock has been heavily ramping up sport programming on its platform -- and not just limited by NBC “Sunday Night Football” games.
This also includes NASCAR, Big Ten football and basketball, golf, rugby, cycling (Tour De France), U.K. Premier League football, and other sports franchises. Paramount+ looks to do that same, with NFL and NCAA games as well as soccer, including Italy's top Series A football.
Still, all this maneuvering by these still young legacy-based streamers' platforms need to move on to the next level.
Amid mostly net losses for these new businesses, Media Dynamics estimates legacy TV-owned streaming for the upfront a year ago amassed $8 billion in ad revenue. That is good news.
The trouble is that major cash-positive digital-first streamers Prime Video, Netflix and Apple TV+ are in it for the long term with money to burn.
Legacy TV-streaming on the back foot? Time to step on the gas this upfront. Open the taps, and make as many deals as possible.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, a few points to note. First, prime time is only part of the "Linear" upfront. It also includes other dayparts plus national syndication and a small amount for unwireds. So all together we are talking about something like $30-32 billion for "linear TV" not just the prime time figure. Also, at this point the buyers and sellers are just posturing--with the buyers claiming that ad sales will be "soft" while the sellers, no doubt, will claim that they can command modest increases. As for the CTV figures, last year's $8 billion estimate included all sellers not just those AVODs or FASTs owned by the "legacy networks". In addition, there were other sales---one might dub them "scatter" for CTV but we don't have a tight figure on that one.
As for Amazon, while it is a new factor in the upfront, Amazon Prime with ads probably commands a mere 2% of the total TV viewing pie while linear TV gets about 50% and ad-supported streaming--sans Amazon----gets roughly 19-20%. So it's hard to see how Amazon Prime is going to shake up the upfront market---it's simply one more decent sized player in the game.