Paid Media Updates

Media Update: Max Adds Live Sports, Mixed NFL Viewership, and Political Ad Trend Projections

By Tinuiti Innovation & Growth Team
Media Update header 9-20-2023

Key Highlights

  1. Streaming: WBD’s Max is adding live sports, such as NBA games and the NCAA March Madness Tournament, to expand beyond the premium content of HBO and adjust to the linear/streaming shift. 
  2. Linear: The return of the NFL has brought a mixed-bag in terms of viewership – TNF on Amazon Prime is notably up. 
  3. Ad Economy: Total political advertising spend in 2024 is projected to reach over $10 billion, with broadcast TV taking the lion’s share. 
  4. Consumer Economy: The labor market is continuing to cool as the number of available jobs decreases across industries. 

Streaming

Ad-supported streaming video supply has been increasing recently. 

Ad-Supported OTT Video Impression Availability

Industry Notes (Video)

1. The timeline for Comcast’s sale of its â…“ stake in Hulu has been moved up three months to September 30th, giving Disney the option to own the massive streaming service in its entirety. The looming Hulu decision represents a critical point in Disney’s streaming strategy. Per their agreement, Comcast has the right to compel Disney to buy its share, as Disney has the right to compel Comcast to sell its share. However, the entire service is valued at $27.5 billion and Comcast CEO Brian Roberts has suggested that it might be worth north of $30 billion, strongly suggesting that Disney will be the buyer. For Disney, Hulu is a very important asset in its bundle with Disney+ and ESPN+. Full ownership of Hulu would allow Disney to fully integrate it into its broader streaming bundle. This bundling gives Disney pricing power and also sustains its position in the traditional pay TV model, even as linear networks like ESPN move to direct-to-consumer.

For other media companies, Disney’s streaming moves underscore the rising imperative of aggregated bundles in the next era of streaming. As consumers face choice overload and Netflix plateaus, scale and consolidation will be key. This explains Disney’s proactive bundling approach and also foreshadows more industry M&A as players seek the safety of bundled streaming products. While navigating streaming’s rise, Disney is strategically keeping one foot planted in the old pay TV world.  |  StreamTV Insider

2. On the topic of bundles, Warner Bros. Discovery is taking a huge step towards expanding its Max platform. After announcing it would be adding live broadcasts of CNN last month, WBD has decided to air live sports on Max as well. The addition, dubbed Bleacher Report Sports after the company’s sports segment, will be free for subscribers until March 2024, at which point they will have to pay an additional $9.99/mo – an intentional deadline given that WBD will be streaming the March Madness tournament. This is the first time that the live sports portfolio has been available for streaming, and the decision to charge for it represents a departure from the strategies of Paramount+ and Peacock, which include sports content for no additional cost. It is markedly similar to the Disney bundle, and may usher in the next stage of streaming – bundles that are somewhere between premium streaming platforms (like Netflix) and vMVPDs (like YouTube TV).  

At its core, this is a classic bundled goods strategy. Sports have always commanded outsized value from a passionate fan base willing to pay top dollar. Now WBD is harnessing this leverage to drive sign-ups to HBO Max, banking on sports fans sticking around for its wider content library. Offering in-demand sports directly to consumers drastically reduces the need for bloated TV bundles. While risky for WBD’s linear networks, this trade-off brings far greater upside as streaming continues its inevitable takeover. To be certain, the cable bundle isn’t dead – but its composition is radically changing. It seems likely that this move by WBD and the forthcoming ESPN+ DTC product will cause ripples throughout the cable industry and lead to new, lighter cable bundles.  |  Bloomberg

3. TCL has launched TCLtv+, a free ad-supported streaming TV (FAST) service available on TCL smart TVs in the U.S. and Canada. The service offers over 200 live linear channels and 1,500 on-demand titles at launch. TCLtv+ represents a relaunch of TCL’s previous free streaming app, now enhanced with new features. As with other TV makers like Samsung and Vizio that have launched their own free streaming platforms, TCLtv+ is a part of OEM’s strategy to “control the glass” – that is to own as much as the TV marketplace on their TV sets as possible. We should expect to see TCLtv+ grow a respectable audience as it expands across TCL TVs and operating systems.  |  StreamTV Insider

Industry Notes (Digital Audio)

Spotify’s acquisition of Podsights has had significant repercussions in the podcast advertising landscape, with advertisers now demanding an open and transparent measurement environment. Acast’s recent decision to stop accepting new campaigns that use Spotify’s Ad Analytics underscores this shift in the industry. Instead, Acast has opted for a strategic partnership with Podscribe as its preferred attribution partner, offering advertisers attribution services without additional costs. This move allows advertisers to impartially measure and optimize their podcast advertising campaigns across the open podcasting ecosystem, aligning with the growing demand for transparency in podcast ad measurement.

Acast’s commitment to fostering an open and platform-agnostic ecosystem further reinforces this shift in focus. By collaborating with Podscribe and establishing a roster of certified attribution partners in different regions, Acast is providing advertisers with the flexibility to choose the attribution partner that best suits their needs. This approach aims to create a more open and competitive marketplace for podcast advertising measurement, catering to advertisers’ preferences for an unbiased and transparent environment. It also reflects the industry’s recognition of the importance of embracing diverse measurement solutions to meet the evolving needs of podcast advertisers.

The fallout from Spotify’s acquisition of Podsights has ignited a drive towards openness and transparency in podcast advertising measurement. Advertisers and platforms like Acast are actively seeking partnerships that align with this vision, allowing them to make data-driven decisions and maximize their podcast ad investments. As the podcasting industry continues to evolve, it’s clear that advertisers are demanding measurement solutions that prioritize impartiality and flexibility, ultimately shaping the future of podcast advertising measurement.  |  PodcastNewsDaily

Linear Media

Viewership for all genres has been down YoY. 

Industry Notes

1. The return of football brought a mixed bag for NFL viewership in the opening week of the 2023 season. While standouts like the Thursday Night Football opener on NBC and Monday Night Football on ESPN scored big audiences, four out of five Sunday windows saw double-digit declines year-over-year.

The Thursday night kickoff game drew 24.9 million viewers, the most since 2015, riding high off excitement for the new season. But Sunday slumped with many low-scoring affairs. Monday night then rebounded with the Aaron Rodgers-led Packers taking on the Buffalo Bills and the New York Jets fresh off Hard Knocks. The audience of 22.64 million was the largest Monday viewership this century, tied with a 2005 game.

Largest Monday Night Football Audiences Since 2000 (bar graph)

As the NFL heads into a new season, several factors make this year unique. Sunday Ticket has moved exclusively to YouTube TV in a seismic shift for the league’s streaming strategy. Amazon Prime will host the first ever Black Friday NFL game in November, poised to attract a massive audience for the e-commerce giant. And finally, not unique to this season – but worth mentioning in the discussion of all-time viewership record – since 2020 Nielsen has counted OOH viewership (bars, restaurants, etc.) in total viewership numbers, so comparisons are not apples-to-apples. For the sake of simplicity and industry standards, unless this is specifically called out, it is assumed for all NFL ratings. 

While Week 1 viewership was uneven, the appetite for NFL football remains voracious. With new streaming distribution deals, hype around specific teams and players, and the continual shift of audiences from linear TV to internet-connected platforms, the 2023 season promises to be a major proving ground for the league.  |  SMW

2. A high-stakes dispute between Disney and cable provider Charter Communications resulted in ESPN and other Disney-owned channels being dropped right before the start of the NFL season. This interrupted access for Charter’s 14.7 million subscribers, causing many to miss college football and U.S. Open tennis. The core of the clash was Disney’s intent to offer ESPN+ directly to consumers as a standalone streaming service. Charter balked over concerns this would undermine their traditional TV bundle. After tense negotiations, a last-minute deal was struck before Monday Night Football.

Under the new agreement, Charter subscribers will get Disney+ and ESPN+ bundled at no extra cost, with Charter paying Disney a wholesale rate. To offset costs, Charter will drop some lesser-viewed Disney channels like Freeform and Disney Junior. The company will pay higher fees for ABC, FX and other retained networks.

Critically, Charter has committed to making ESPN available to 85% of its customers, providing Disney an ample linear TV footprint as it pursues new digital offerings. This emerging strategy aims to position ESPN as a one-stop hub for sports programming and betting. The compromise contrasts with Comcast ending free access to Peacock Premium in pursuit of direct subscriptions. Disney and Charter’s deal recognizes the gradual evolution of cable and the need to maximize revenue across both traditional and streaming platforms during this transition time.  |  Bloomberg

1. The advertising market climbed by a strong 6.2% in the month of July. This increase is mostly due to the YoY comparison to the small ad-recession in H2 of 2022. As ad spend will be measured against the declines that endured from July 2022 to April 2023, we should expect to see the ad-market flat or positive throughout the end of the year.

Monthly Change in U.S. Ad Spending YoY

To the point that the ad-economy is recovering, IPG Mediabrands’ Magna upwardly revised its projection of U.S. ad spending in 2023 from 2.5% to 3.4%. This brings the consensus up 0.2 points to 3.1%. While there has been some uncertainty in the macroeconomic environment in 2023, it seems that things have become more stable.  |  Media Post

U.S. Ad Consensus, Effective Sept. 18, 2023

2. According to a new forecast, political advertising spending in the 2024 election cycle is expected to reach record highs, potentially topping $10 billion across television, digital media, and radio. This continues a trend of escalating ad spending seen in the 2022 midterm elections, where overall outlays across broadcast TV, cable, streaming, and social media platforms exceeded previous cycles. In 2022, broadcast TV received the largest share at $4.3 billion, followed by $1.4 billion for cable, $1 billion for streaming, and $1.2 billion collectively for Google and Facebook. Radio received $300 million. Typically in election years, tighter inventory in local markets drives up prices as campaigns target battleground states.

Broadcast TV Still Gets 50% of Political Ads - Projected political ad spending by race and medium, 2023 to 2024 (bar graph)

For 2024, streaming platforms are poised to take an even greater share of political ads given the proliferation of new services and the wide national interest in a presidential race. As cord-cutting accelerates, streaming provides key targeting capabilities for campaigns trying to reach younger demographics. With major candidates already gearing up for presidential runs, the massive forecasted spending of over $10 billion reflects the anticipated intensity of the race and the high stakes involved.  |  Bloomberg

3. It’s no secret that X (formerly Twitter) has struggled with ad sales since Elon Musk took over. Surprisingly, X has rolled out a new partnership with Google to serve programmatic ads on users’ main timeline, which has a more mature brand safety reporting mechanism backed by Integral Ad Science and DoubleVerify. Post-Musk acquisition, X has broadened its advertising canvas, weaving ads into comment sections of buzzing posts, search results, and the pages of its top-tier users.

However, Google’s dive into this alliance is, shall we say, not without trepidation. They now bear the mantle of ensuring X aligns with their publisher standards, a herculean task that’s about keeping advertisers away from the murky waters of the web. Google has been historically vigilant about these standards, and this partnership will be no exception.  |  Ad Age

Consumer Economy

1. Retail sales rose an unexpected 0.6% in August as gas prices rose and consumers modestly increased spending at stores and online. Spending on electronics and appliances jumped during the back-to-school shopping season. Car dealership sales grew even as auto loan rates are historically high. While the growth in retail sales doesn’t capture services, based on the popularity of movies like Barbie and Oppenheimer, and the massive attendance at Taylor Swift and Beyonce concerts, it seems likely that data will show that overall consumer spending increased in August.

Still, major retailers have been warning all year of harder times ahead and their projections appear accurate. While consumers are still spending, the impact of inflation and higher borrowing costs is expected to bite hard. Quarterly earnings from big box stores and chains have telegraphed declines in discretionary purchases. With savings buffers depleted, households are pulling back on non-essential items. For retailers, the brief respite in August sales is unlikely to change the reality of shrinking profit margins and the need to right-size expenses. While consumers haven’t stopped spending entirely, belts are tightening as economic uncertainty persists.  |  WSJ, WSJ

Retail sales, percent change from prior month (bar chart)

2. As regular readers of this newsletter are well aware, undergirding the health of the overall economy is the remarkably strong job market. Over the past few months it has become clear that the labor market is slowing down and growing at a rate more consistent with pre-pandemic trends.

Nonfarm payrolls, change from a month earlier (bar graph)

A significant factor in this moderation is that the labor force participation rate has risen. This has led to a notable decrease in the number of available jobs, which was partly responsible for the steady wage growth observed over the past year.

Job openings rate by industry (chart)

As the labor market slowly cools down, the Fed seems on track to keep interest rates high in the interest of driving inflation down to its 2% target.  |  WSJ

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