Media Update: Peacock Adds 2 Million Subscribers, Ad Market Correction Continues, and Inflation Falls to 4.9% in April

Streaming viewership dipped in the beginning of May, but the level of aggregate supply has remained quite steady over much of the past three quarters.
Industry Notes (Video)
1. NBCUniversal reported a 6.1% drop in ad revenue in the first quarter to $2.03 billion, amidst a weakening TV ad marketplace overall. This figure accounts for the fact that NBCU hosted the Olympics and Super Bowl last year – YoY losses are much greater with the ad revenue from those events included in a comparison. NBCU cited lower audience viewership and Comcast also lost 614,000 cable subscribers.
Despite the decline in ad revenue, NBCUniversal’s streaming platform, Peacock, showed remarkable growth by adding 2 million subscribers in Q1 and increasing overall revenue by 45% to $685 million YoY. The platform now boasts a total of 24.5 million subscribers, which is still significantly lower than competitors like Hulu (39.4 million) and Netflix (75 million in the USA and Canada), but growth does indicate a strong appetite for its streaming content. The company is optimistic that revenue will continue to increase, especially with the unveiling of a new suite of linear streaming ad tools and its new ad format called “Must-ShopTV”, a new shoppable ad format allowing viewers to purchase items directly from the ads they see on the platform (e.g., the knives and cutting boards featured in Top Chef). The capability leverages KERV Interactive to identify shoppable products and displays a QR code to then purchase the item on a mobile device.
The announcement was made during NBCUniversal’s annual One21 event; other new ad tools are cross platform and will theoretically enable advertisers to better understand reach, effectiveness, and return on investment ROI on both linear TV and streaming platforms. | Media Post, Media Post
2. A recent report by The Information revealed that nearly half of YouTube’s US viewership is now on TVs, marking a significant shift in user behavior. This change in viewing habits has been driven by factors such as the increased availability of smart TVs, YouTube’s partnerships with TV manufacturers, and the rise of streaming devices like Roku, Apple TV, and Amazon Fire TV. The shift to TV screens has led to longer watch times as viewers tend to spend more time watching content on larger screens compared to smaller devices.
The growing viewership of YouTube on TV screens reflects the increasingly blurred lines between TV, PC, and Mobile content consumption. As TV and digital advertising platforms evolve to offer comparable metrics and targeting capabilities, marketers can seamlessly integrate their campaigns across both mediums, redefining the way brands connect with their audience in the ever-changing media landscape. | The Information
Sports viewership stayed strong with the NBA playoffs. The YoY decline in news viewership likely reflects the ongoing coverage of the invasion of Ukraine, which began in late February last year.
Industry Notes
1. If you’ve been following these updates you know that the industry is closely tracking the weakening of the regional sports network (RSN) system with the bankruptcy of Diamond Sports Group (DSG)/Bally Sports. This week the NHL Vegas Golden Knights, WNBA Phoenix Mercury, and NBA Phoenix Suns announced they are ditching the RSN model for free-to-view broadcast television. While the Golden Knights are free to leave AT&T SportsNet, the soon to be ended RSN group owned by Warner Bros. Discovery, the Phoenix teams are facing legal challenges from DSG, which alleges that they are violating bankruptcy law by switching broadcast partners. With the collapse of several RSNs, broadcast television represents a safe place to park their broadcasts and ensure a certain level of viewership and ad revenue while they decide how to adapt to the landscape.
Right now this is only happening in a few markets, and the results of Bally’s restructuring could certainly impede this system from progressing throughout every league. At the bare minimum we can probably expect to see a rise in broadcast viewership next season(s). It’s also worth noting that these games won’t be limited to broadcast – the companies that bought the rights for the aforementioned teams will be streaming them for free through proprietary or FAST platforms. Additionally, these contracts still allow the media companies to charge out-of-market viewers on DTC platforms. With the RSN system in jeopardy, we will likely see the proliferation of new distribution models across the United States. | Fierce Video
2. As we mentioned two weeks ago, viewership during the NBA regular season was down slightly this year, but not so much to cause concern. Indeed it seems that with each week that the playoffs progress, there is less reason to fear that the league is facing a meaningful decline in popularity. Across games in the first 2 rounds of the playoffs, the 2023 playoffs have become six of the top ten most viewed games. With the usual caveat that Nieslen only began to count out-of-home viewership in 2020, this performance is still notable. Matchups have a strong influence on these games: only one of the top ten did not include the Warriors or Lakers, and every game in the series between these two teams has made the list. | SMW, SMW
1. The U.S. ad market fell for the ninth consecutive month in March. The first four months of ad spending in 2023 face a tough comparison to 2022, when growth was incredibly strong, but the numbers suggest the advertising market is in a correction.
But there appears to be some cause for optimism, based on the earnings of the largest players. Although Alphabet’s advertising revenue declined less than a percent in the first quarter, Meta, Microsoft, and Amazon all posted positive YoY growth over the same period. Additionally, some of the largest advertisers, such as Hershey, P&G, JP Morgan Chase, Citigroup, and American Express all spent more on advertising in the first quarter. Looking to the future, we can expect marketers to remain somewhat cautious amidst uncertain macroeconomic conditions. | Media Post, Digiday
2. The proliferation of internet-enabled devices has made digital media the primary source of information, entertainment, and shopping for millions of people. Consequently, brands are continuing to shift their marketing strategies to capitalize on this trend and reach audiences where they are most active. Digital video advertising is on a seemingly unstoppable upward trajectory, with spending expected to surge by 17% in 2023 as traditional media consumption, such as print and television, gradually declines.
Of the three categories of digital video spend, CTV, social video, and “other,” CTV is projected to grow the fastest, aided by increased adoption of streaming services. According to the report, ad spend on digital video is projected to reach a 47/53 split with linear TV, a five-point change from 2022. This shift in ad spend is certainly in line with the acceleration of cord-cutting. The projected increase in CTV ad spending in 2023, compared to the decline in linear TV spending, highlights the growing importance of digital video advertising. | Media Post
The latest inflation numbers indicate that prices are beginning to moderate, but that inflation is sticky. The CPI fell to 4.9% in April on an annualized basis, down from 5.0% the previous month. The results of this report are very much in the eye of the beholder — inflation is continuing its downward trend, but some areas, such as used cars, increased month over month.
While the steady decline since the peak in June of last year is a sign that Fed’s interest rate hikes are having the desired effect, there is some concern that the inflation will remain above the target of 2%. Fueling this concern, the labor market showed few signs of weakening in April. Although job growth appeared to be slowing in February and March, the labor market added 253,000 jobs in April and the unemployment rate fell to 3.4%. As to how this is affecting consumer health, we will have a better picture later this month when April’s consumer spending data is released. | WSJ, Bloomberg