Ad-Supported Streaming Took a Huge Victory Lap at TV Upfronts 2024

Some 18 months after major streamers Netflix and Disney+ launched ad tiers to boost revenues the experiment is clearly paying off — and is helping to accelerate the pivot for viewers away from traditional linear television.

That was the message that streaming executives conveyed to advertisers last week at the annual television upfronts in New York City.

Over the course of four days, some of the biggest names in television pulled out all the stops to impress advertisers, from letting Jimmy Kimmel roast his boss and Disney CEO Bob Iger, to YouTube hosting a Billie Eilish concert at Lincoln Center. This year’s TV upfronts were full of the typical ploys to impress big spenders, such as elaborate parties and free swag, as well as fresh takes on the tired TV tradition from advertising newbies like Netflix.

But the big news was that about half of new sign-ups over the past year for Netflix, Max and Disney+ were on ad-supported plans, executives told TheWrap. Add to that the fact that Amazon converted all its Prime Video users to ad-supported in January by default and it’s easy to understand why the excitement this year revolved around growing efforts to pump up ad tiers.

The ad-tier momentum is building as advertisers are spending less and less on linear television, whose TV divisions are dragging down the overall earnings of media and entertainment companies like Disney, Warner Bros. Discovery and Paramount. Other than Netflix, streamers have yet to reach consistent quarter-over-quarter profitability and are trying to make up the shortfall by supplementing with ad-supported revenues.

In 2024, digital video in the U.S., which includes connected TV, social video and online video, is expected to generate an estimated $63 billion in ad spend and earn 52% of total share versus 48% for linear, according to a study by the International Advertising Bureau. Connected TV ad spend, which includes ad-supported streamers and virtual multichannel video program distributors like YouTube TV, exceeded $20 billion for the first time ever in 2023 and is projected to grow 12% to nearly $23 billion in 2024.

“If you look at the market just three or four years ago, less than half of the connected TV players even had ad tiers and now they all do,” John Halley, Paramount Global’s ad sales chief, told TheWrap. “At the end of the day, more money will be coming into this vertical of premium video because it is so effective and works in so many different ways for advertisers.” Paramount+ launched an ad tier in 2021.

John Halley
Paramount Advertising President John Halley (Photo courtesy of Paramount)

At this year’s upfronts, TV and streaming executives also discussed spending on live sports, which is higher than it’s ever been. Amazon, Disney, Warner Bros. Discovery and NBCUniversal are currently circling a deal with the NBA worth a reported $76 billion. Netflix, after spending years saying it wasn’t interested in the live sports space, signed a three-year, $75 million-per-game deal with the NFL which secured the streamer as the home of Christmas Day games.

“In a world where you’re seeing audiences shrinking in other parts of the media landscape, live sports continue to grow and do very well,” Jeff Collins, president of advertising sales for Fox, told TheWrap. “That’s why advertisers really embraced it.” Collins noted that “over a third” of the top broadcasts of the year in terms of viewership happened on Fox Sports alone.

Courtesy of International Advertising Bureau
Courtesy of International Advertising Bureau
Courtesy of International Advertising Bureau
Courtesy of International Advertising Bureau
Courtesy of International Advertising Bureau
Courtesy of International Advertising Bureau

That consistent viewership is something that the new kids on the block — Amazon, Netflix and YouTube — have noticed. All three platforms now have partnerships with the NFL: Amazon with Thursday Night Football, Netflix with its Christmas Day games and YouTube with the NFL Sunday Ticket.

This year’s upfronts event marked Amazon’s inaugural presentation to advertisers. It was Netflix’s second year at the advertising week — and first in-person — and YouTube’s third Brandcast showcase. Despite being new players to the upfronts game, all three companies had the viewership to justify their attendance and make their respective presentations the most sought after in New York.

Brands can target 200 million monthly viewers globally on Prime Video, including 115 million in the United States. Netflix says it boast nearly 270 million total subscribers globally as well as 40 million monthly active users on its ad tier.

As for YouTube, the streamer reported that viewers watch over 1 billion hours on its platforms globally each day and that its live TV offering YouTube TV currently has over 8 million subscribers.

The fight for scale

During last year’s upfronts, advertisers’ collective commitments to linear and streaming grew 3% year over year to $27.1 billion, according to Media Dynamics Inc, a firm which tracks upfronts spending. Primetime ad spending for linear television fell 5% year over year to $19.1 billion, with broadcast networks seeing a 3% drop to $9.6 billion and cable taking a 7% hit to $9.5 billion.

In comparison, streaming ad spend ballooned 31% year over year to $8 billion, wiping out all of linear’s losses.

Disney advertising chief Rita Ferro acknowledged the industry-wide decline in linear, but said that advertiser demand for its networks remains “very robust” and an “important mix” of marketers’ overall commitments. NBCUniversal ad sales chief Mark Marshall noted that rather than buying linear and AVOD separately, marketers need to look at both to best maximize reach.

“A streaming-only or a linear-only approach simply doesn’t work anymore, as you miss out on your total audience,” Marshall told TheWrap in a statement. “Streaming isn’t cannibalizing linear — its growing total viewership and bringing in new audiences. Broadcast is still a place where marketers can get that immediate, scaled reach that they can’t get anywhere else.”

The interest in streaming has translated to subscriber and active user growth on the ad-supported offerings. Over 40% of new Netflix sign-ups come from the ad plan in the countries where it’s available. Disney+, which recently reported 153.6 million total subscribers, has 22.5 million ad tier subscribers globally, with over half of new subscribers choosing the offering. Over half of Hulu’s 50.2 million subscribers are on ad-supported plans, Ferro told TheWrap. And half of the new sign-ups to Max in 2023 were for its ads tier, said Warner Bros. Discovery ad sales chief Jon Steinlauf.

Also surging in the market is YouTube. In addition to YouTube TV’s 8 million subscribers, YouTube Music and YouTube Premium surpassed 100 million subscribers in January, including trials.

Even traditional broadcasters have leaned into the digital bump. One of the buzziest segments of Fox’s presentation highlighted Tubi, which has become the fastest growing AVOD offering and reached 78 million monthly active users in 2023, a year-over-year increase of 59%.

Warner Bros. Discovery, Paramount Global and NBCUniversal did not reveal how many ad-supported subscribers they have.

Mark Marshall
NBCUniversal ad sales chief Mark Marshall (Credit: Virginia Sherwood/NBCUniversal)

Sports is a slam dunk for advertisers

While entertainment linear television continues its decline, broadcasters and streamers alike are piling into live sports, an area that Disney’s Iger has continued to hype. Every media company flexed its sports offerings during presentations to advertisers last week.

Even the CW network, which didn’t have sports nearly a year ago, has seen a sports-related bump. After adding ACC football, basketball and LIV golf to its lineup, Nielsen data showed “30 million people watched sports on the CW,” the network’s entertainment president Brad Schwartz told TheWrap.

Amazon and Netflix are expanding their sports programming footprint. In addition to Thursday Night Football, Prime Video struck a media rights agreement with NASCAR earlier this year that will see it exclusively stream five Cup Series races and offer exclusive coverage of practice and qualifying races for the first half of the season (excluding The Clash, Daytona 500 and All-Star races). Aside from its NFL deal, Netflix greenlit three documentaries and docuseries about the Olympics.

As for YouTube, while the platform isn’t looking to forge new partnerships, it is looking to deepen its relationships with the NFL and NBA. It plans to optimize the NFL Sunday Ticket experience by integrating statistics, plays and fantasy football into the platform as well as optimizing its multiview option, which allows users to watch multiple games at once. “We’re really focused on the NFL. It’s been a rich partnership, and it takes a lot to do these greater integrations,” Mary Ellen Coe, YouTube’s chief business officer, told TheWrap.

As new players enter the sports arena, older players touted their expertise. For Fox, that meant highlighting on-air talent like Tom Brady, Kevin Burkhardt, Erin Andrews and Tom Rinaldi. “We feel very good about the headstart we have,” Collins said.

Disney is seeing advertisers place multi-year commitments for its sports portfolio, with college sports being a big driver of the company’s brand opportunities. ESPN, which is on track to launch a fully direct consumer version of the network, has more than 35% of sports hours across the marketplace, Ferro said.

As more games shift to streaming, Steinlauf sees an opportunity to leverage sports programming on Max alongside its linear networks TNT and TruTV as a “real estate play,” and to sell advertising as a “triplecast.”

“When TNT is doing the Knicks versus the Pacers, it’s not a 71 million home cable network. It’s the 71 million homes of TNT plus the incremental audiences you get from TruTV, but then you move over to Max and you’re picking up 20 million+ homes that have Max that don’t have pay TV. So for that advertiser you ride the benefit of clearing over into these streaming homes,” he said.

Then there’s Venu Sports, the upcoming sports-focused app that’s a collaboration between Disney, WBD and Fox that’s set to launch in the fall. “Advertisers are very interested because the service is really geared toward reaching incremental and younger audiences,” Collins said.

The sports shift is also proving to be an “effective growth engine” and subscriber retention tool for NBCUniversal’s Peacock, according to Marshall. He noted that more than 80% of the 27.6 million total viewers who watched Peacock’s exclusive NFL playoff game in January remained on the platform to consume other premium content over the subsequent 30 days.

This summer, Peacock and NBC will be home to the 2024 Paris Olympics, which has already sold $1.2 billion in advertising as of April.

New kids vs. the old kids

Amazon Upfront
A NASCAR racecar at Prime Video’s inaugural upfront (Lucas Manfredi/TheWrap)

This year’s biggest upfronts spenders were Amazon, Netflix and YouTube, which also featured the most-anticipated presentations of the week.

True to form, Netflix attempted to disrupt the upfronts itself, opting to forego the traditional theater presentation for a more curated event that asked guests to explore the Netflix “experience.” That included installations for “Squid Game,” “Stranger Things,” the WWE and more.

Amazon embraced a more traditional setup for its first upfronts, showering its guests with Mr. Beast chocolate bars, thematic installations and appearances from celebrities like Reese Witherspoon. YouTube pulled out all stops for its third Brandcast, treating audiences to performances from Billie Eilish, Benson Boone and K-pop group Stray Kids. Rather than celebrities, the company made the more personalized choice of letting some of its creators lead the presentation.

As for the traditional players, NBC went big with its presentation at Radio City Musical hall, which saw the network leverage artists Kelly Clarkson and Michael Buble alongside a full orchestra that rose out of the floor, and TV and film talent like Jimmy Fallon, Seth Meyers, Bowen Yang, Keenan Thompson, and Amanda Seyfreid appearing on stage to help entice advertisers and introduce upcoming programming — including a sneak peek at John M. Chu’s first “Wicked” film.

Disney’s Iger also made his first upfront appearance since 1994 in a presentation at the Javitz Center that was jam-packed with sneak peeks of series like “The Bear” and “Daredevil: Born Again” and stars like Ryan Reynolds, Jason Kelce, Quinta Brunson and Jimmy Kimmel, who closed the presentation with a scathing roast.

Though they brought out celebrities like Mindy Kaling, Shaquille O’Neal and Conan O’Brien, the possibility that TNT could lose the rights to the NBA after more than three decades cast a shadow over WBD’s presentation. As for Fox, the likes of Gordon Ramsay and Joel McHale couldn’t disguise the fact that its New Orleans-themed afterparty didn’t last nearly as long as other parties the company has hosted over the years.

At least two networks — Paramount and Nexstar — opted to hold more intimate gatherings with advertisers in an effort to avoid the crowded week with their competitors for deeper conversations.

“As the message becomes more varied and complex, the format needs to change to acknowledge it,” Paramount’s Halley said. “The feedback on this is unanimous that it’s a far better format for us to tell our story and for them to surface to us the things that they’re thinking about. It’s for the modern age and we’re not going back.”

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