Media Update: Amazon Prime Video Ads, WGA Strike, and Post-Pandemic Consumer Spending
Key Highlights
- Streaming: Amazon Prime Video has confirmed that it will be joining the ranks of Netflix and Disney+ by introducing advertising in early 2024.
- Linear: Coach Prime and the Colorado Buffs are drawing remarkable TV audiences, a feat that makes them much more valuable heading into the conference realignment next year.
- Ad Economy: The WGA strike has concluded, which should bring production schedules back online for Q1 2024.
- Consumer Economy: A report from the SF Fed shows that consumers have nearly spent through their excess pandemic savings, a point of concern with consumer spending still strong.
Streaming
Ad-supported video supply has continued to rise in recent weeks, a surprising move after the relative flatness over the past year.
Industry Notes (Video)
1. In August, the TV landscape experienced a few shifts, driven by the back-to-school season and sports events. Broadcast and cable TV saw modest growth, with a 1.6% and 1.7% increase, respectively, fueled NFL preseason and presidential debates. The rise in cable TV was particularly driven by viewers aged 65 and older. In contrast, streaming usage dipped by 1.6%, largely due to a decrease in usage among viewers aged 2-17. Disney+ remained strong with popular titles, while Netflix experienced a 4.8% drop. Peacock gained 8.3% in usage thanks to various events. September is expected to bring more competition to streaming platforms as sports seasons take center stage, offering a diverse TV landscape with limited new scripted content. | Nielsen
2. The password-sharing apocalypse is coming, and another domino has begun to tip. Starting November 1st, Disney+ will implement password-sharing restrictions in Canada, a testing ground for the U.S. and the world. Netflix (in)famously tested this feature in South America and then Canada months before bringing it to U.S. soil. While Disney has not provided extensive details on the enforcement process, it has emphasized that subscribers are prohibited from sharing their accounts outside their households. The move follows Disney CEO Bob Iger’s previous statement about actively exploring ways to address password sharing, citing a significant number of people sharing passwords across Disney’s services. As password sharing crackdowns become standard in the streaming industry, we should see a bump in the number of ad-supported viewers as individuals move towards cheaper individual plans. | The Verge
3. Amazon has announced its plan to introduce “limited” advertising on its Prime Video platform in early 2024, initially rolling out in the U.S., U.K., Germany, and Canada, followed by other countries later in the year. While Amazon does not intend to alter the existing price of its Prime membership, it will offer an ad-free tier for U.S. Prime members at an additional $2.99 per month, with pricing for other regions yet to be disclosed. This move is aimed at generating additional revenue to support Amazon’s heavy investments in digital video and music content. It aligns with the trend in the streaming industry, as most major streaming platforms have introduced ad-supported tiers to diversify their revenue streams – Apple TV+ is truly one of the few remaining ad-free players in the space. While Amazon aims to have “meaningfully fewer ads than linear TV and other streaming TV providers,” it remains to be seen how consumers will respond to these changes and how other streaming giants, like Apple TV+, might adapt in response to this evolving industry trend. | StreamTV Insider
4. AMC Networks is rolling out its advertising-supported tier for AMC+, offering viewers a wallet-friendly alternative at just $4.99 per month (compared to the ad-free $8.99 per month option). This new tier includes content from AMC’s exclusive programming, Shudder, Sundance Now, and IFC Films Unlimited, in addition to the linear channels for AMC, IFC, BBC America, and Sundance TV.
AMC Networks will include a range of ad offerings, from interactive ads to trivia breaks, which are aimed at engaging viewers. AMC+ joins the growing ranks of streaming platforms, including the likes of HBO Max, Netflix, and Disney+, to embrace advertising. The company also is taking a multi-pronged approach toward streaming, not dissimilar from HBO. Both networks have seen revenue growth suffer because of the decline of linear television, and are licensing out their original content to free ad-supported TV (FAST) platforms to address this. AMC has struck deals with Vizio and Roku to bring on-demand content and linear programming to their FAST platforms. We can expect streamers to continue to pull every lever they have to better monetize their content. | Ad Age
Linear Media
Sports viewership spiked with the start of the NFL season, but has since returned to lower-than-average levels.
Industry Notes
1. College football – and Colorado specifically – is doing extremely well this year. In the first four weeks of the NCAAF season, six games have averaged over eight million viewers. In the whole of last season, there were only seven games that hit that mark. The story here is, of course, coach Deion Sanders and the Buffs, which have gone from one of the worst teams in the Pac-12 to the focus of the nation. Their games against Oregon and CSU would have been snoozers in previous years – but with the momentum of coach Prime, Colorado is one of the most watched NCAA teams this year.
Now, as Colorado has suffered losses to Oregon and USC, it’s unlikely that it will continue to pull in >eight million viewers for games. However, the Buffs phenomenon could be an important benchmark before their move to Big 12. In fact, the viewership of the entire Pac-12 is being watched as the conference breaks apart and joins other (bigger) conferences after this season. It’s believed those conferences will attract even larger TV audiences with the addition of these Pac-12 schools. Advertisers should keep a close eye on the NCAAF viewership numbers this season as the playoffs will feature eight teams for the first time. | SMW
2. The NFL’s dominance of the television is unmistakable. One might be inclined to believe that viewership is dominated by males, after all, a majority of NFL ads are targeted at men. But according to the NFL, women represent almost half of their fans. Which is probably why the relationship of Taylor Swift and Travis Kelce is pulling strong numbers for the NFL. The SNF Chief-Jets game averaged 27 million viewers, an increase of 22% from a year ago. Although it is too soon to know if Taylor Swift mania will have a lasting impact on the NFL base, while she’s attending games there are more eyeballs glued to the screen. | Ad Age
Ad Economy
1. Nearly five months after the strike began, a tentative three-year agreement was made between the WGA and Hollywood Studios. It is believed that the deal increases residual payments on streaming content & addresses AI-related concerns, which were two major points the WGA was seeking alignment on.
Writers could resume work today if given approval, though strike is still technically in effect until the final deal is signed. However, the SAG-AFTRA strike means the actors themselves are still striking, which limits the degree of work these crews can pick up. This is expected to mean a slower ramp up of activity, as some content has already been canceled or pushed back into 2024. It is speculated that the resolution of the WGA strike may help create the framework for SAG-AFTRA to do the same, given the closely related issues at hand surrounding streaming and AI.
Expect the impact of shows/content resuming to largely impact linear for Q1’24 and beyond as most network shows and schedules are laid in for the quarter, and streaming libraries were less affected to begin with. Specific pockets of linear that require regular writing and production, such as late night talk shows, could be back much sooner in early Q4’23. The re-introduction of fresh, original content – when it happens – should alleviate some of the demand pressures the industry has seen in the little original content that does exist today, such as sports. | WSJ
2. The Joint Industry Committee has anointed Comscore, iSpot.tv, and VideoAmp to challenge Nielsen’s dominance in TV measurement. This conditional certification comes just ahead of the Media Rating Council’s long-awaited vote on accrediting Nielsen’s panel and big data integration. Just as Apple and Google leverage their positions as mobile gatekeepers, Nielsen’s ownership of the ratings currency gives it unmatched power over the TV industry. Networks have handed over streaming data in exchange for nothing; now, they want leverage of their own.
Comscore and iSpot in particular have built businesses serving the needs of TV networks; their conditional approval reflects that alignment of interests. Nielsen remains on the outside, still pushing for MRC accreditation as the singular seal of legitimacy. The message is clear: Nielsen’s dominance has expired. Networks are taking back control of their data and rewarding the measurement partners who serve their needs. Comscore and iSpot are now positioned as the heirs apparent, especially if Nielsen stumbles with the MRC. | Ad Age
Consumer Economy
In the wake of the pandemic, one of the most essential questions in understanding continuous consumer spending is “How much do Americans still have saved up?” The most familiar chart, which comes from the San Francisco Fed, shows that consumers have very nearly spent through through their excess savings accumulated during the pandemic:
It’s worth noting that there is a fair amount of variety in estimates of consumer savings. The SF Fed’s reading is a bit more pessimistic than what researchers at the Bank of America Institute find, for example. The broader takeaway from this is that if consumers – particularly those in the median income bracket and below – still have a solid savings balance, they will be able to withstand some of the economic turmoil that might come as a result of high interest rates and sustained inflation. | WSJ
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