Media giants are gearing up for their annual Upfronts presentations to advertisers, taking place amid significant disruption in the industry. While the Hollywood writers and actors strikes have ended, there are still challenges to be faced. However, this year’s Upfronts come with a sense of anticipation for what the future holds.
One topic of discussion during Upfronts week will be the rebound of advertising. Traditional TV ad revenue is still lagging behind streaming and digital platforms. However, there has been a slight improvement, with traditional TV ad buying during Upfronts expected to increase by 1% to $18.79 billion this year. On the other hand, digital advertising spend is projected to increase by nearly 32% to $16.45 billion. Streaming advertising saw a 22% increase across media companies and now accounts for 18% of total advertising. Tech companies like Snap, Roku, Google, and Microsoft have seen a resurgence in digital advertising revenue. Streaming giants Netflix, Amazon Prime Video, and YouTube also have success stories to share with advertisers.
Netflix, in particular, has become the “gold standard” for streaming. With over 270 million global subscribers, the company has seen significant growth, especially with its cheaper, ad-supported tier. In just over a year, Netflix’s ad-supported tier reached over 23 million monthly active users. Amazon Prime Video and YouTube have also experienced growth in advertising revenue, with both companies surpassing analyst estimates. Amazon’s advertising revenue jumped 24% in the first quarter to $11.8 billion, while YouTube’s advertising revenue surged over 20% to $8.1 billion.
However, traditional media players are facing challenges. NBCUniversal reported flat domestic advertising in the first quarter, while Disney saw a decline in advertising revenue for its traditional cable networks and Hulu. Nevertheless, Disney’s ESPN domestic ad sales increased by more than 20% in the quarter. Warner Bros. Discovery reported a decline in traditional TV advertising revenue but saw a 70% jump in streaming advertising revenue. The company recently announced a streaming bundle with Disney and Fox, the first of its kind.
Sports rights are also a topic of interest during Upfronts week. Warner Bros. Discovery currently owns the NBA rights until the end of the 2024-25 season, but the future owner is still being determined. NBCUniversal has emerged as a top contender, while Warner Bros. Discovery considers whether to match their offer. The future of regional sports networks is also uncertain, with broadcasters gradually acquiring rights to local games.
Lastly, Paramount Global chose not to hold an Upfront presentation this year. Instead, the company held several events across different cities, showcasing upcoming content and featuring A-list celebrities. Paramount is currently undergoing a sale process and does not have a singular CEO.
Overall, Upfronts week promises to be an exciting and transformative time for the media industry. While challenges remain, the growth of streaming and digital advertising presents new opportunities for advertisers and media companies alike.
