Why streaming platforms are lagging in TV upfront deals

While first-time presentations from streamers Netflix and Amazon were the shiny new objects of advertiser interest leading into the TV upfront week, negotiations haven’t followed the same trend. Traditional media companies including Disney and NBCUniversal have been the first to close deals, according to four media buyers with knowledge of dealmaking. Commitments to streaming-first companies have been lower priorities, with some saying they’re in line with cable networks. “There is no sense of rush, and conversations are complicated with the growth of streaming and balancing what needs to be committed [upfront] versus what doesn’t need to be committed,” said one media buyer, adding that the days of quick deals based on the prior year’s pricing and volume are gone. In its place is a more complicated math of the most desirable content—primarily sports—and then haggling over how much of the rest of a media company’s inventory has to be packaged in to access it. 40 under 40 entries are open The final deadline for nominations is Aug. 2 Enter here “NBCU, Paramount, Disney and Fox came to the forefront because they have sports, general entertainment and streaming all under one roof, so it’s a broader portfolio offering,” said the buyer. “The next tier of conversation would be the Hallmarks, AMCs and A+Es of the world, who are more focused on their linear properties, and Netflix, who is only focused on streaming.” Netflix and Amazon declined to comment on upfront negotiations. A second buyer, however, placed streaming a rank above cable, but agreed there was no rush to strike deals. The abundance of streaming inventory, much of it tied to audience-based and platform-level buys rather than a finite number of slots in a single piece of content, means “they’re going to still have inventory come August, come January, come February of next year,” the second buyer said. More news: Why Cannes was a hotspot for media data deals “A lot of the digital spend is being held back for programmatic purchases during the year or just holding on to it for a shorter-term purchase,” said the second buyer. “So we looked at [this year’s upfront] as an opportunity to get things that we normally wouldn’t be able to get—let’s right-size the pricing on all of the streaming products.” The second buyer said a unique situation has emerged: while clients’ upfront budgets are down, they’re still inking deals now in an attempt to essentially overhaul pricing at the network streamers, snagging reductions of as much as 40% compared to prior years. “Budgets are down based on the fact that there’s no scarcity of inventory with the exception, possibly, of sports,” said the second buyer. “The reason that we’re doing so much volume in the upfront is because we’re exchanging volume for an adjustment in price. And if the pricing isn’t there, then there’s no reason to move forward.” Disney has agreed to pricing rollbacks in the range of 30% to 40% for its streaming platforms, buyers said, adding that significant rollbacks have been similar across deals for network-owned streamers Paramount+ and Max. The buyers said NBCU’s Peacock has been more fairly priced historically than its competitors, with rollbacks that are closer to 10% to 15%. "Disney is still in very active upfront negotiations; rollbacks of this range are inaccurate," said a Disney spokesperson, adding that Disney changed how it packaged streaming in the scatter market with the introduction of Disney Streaming Entertainment. "Since last year's upfront, there's been more capacity and new entrants to the market looking to grow their share of the advertising pie." Netflix and Amazon are the outliers in broader market pricing concessions, said all three buyers, which puts the platforms at risk of losing out on upfront dollars. Packaging faux pas Ahead of the upfront, multiple media buyers told Ad Age that clients were prioritizing deals with media companies pitching the largest portfolios in order to spread ad dollars across the most content and largest audiences. The third buyer said the broadcast network groups have gained an upper hand over the streaming companies because they’ve become experts at packaging content. “NBCU is still an essential partner because they package better than anyone,” said the third buyer. “They don’t just come at you and say, ‘You want to buy a spot on SNL 50?’” Instead, the third buyer said, NBCU presents packages that “bring together production, celebrity, social, amplification in one buy that make it really easy for the clients to say yes or no. They eliminate the complexity.” The same can be said of other network groups such as Paramount, which the third buyer said can package previously declining assets like the Golden Globes and create demand around them. Netflix and Prime Video have not been able to master the same science, according to the three media buyers. Prime Video has pitched packages for a handful of its upcoming content, such as upcoming series “Beast Games” from YouTube star MrBeast, but has been overly aggressive in pricing it. However, some of the highly touted content during Amazon’s upfront presentation hasn’t gotten the package treatment. The third buyer said there was no package for clients interested in the upcoming game show “Are You Smarter Than a Celebrity?” hosted by Kansas City Chiefs tight end (and Swiftie heartthrob) Travis Kelce. More: NFL, McDonald’s and Tubi CMOs on brand building A fourth buyer said they received confused responses when they inquired into sponsorship for the Roger Federer documentary “Federer: Twelve Final Days,” which premiered on Prime Video on June 20. The buyer said they never received pricing for a sponsorship. While Prime Video is said to have the audience size to still entice advertisers into some level of upfront commitment, multiple buyers said the same may not be true for Netflix. “Given Netflix's lack of scale, they’re one of the smaller independents as far as I‘m concerned, and we’ll get to them at a later date,” said the second buyer. While multiple buyers said no must-buys have manifested across the market, Netflix’s announcement of two Christmas Day NFL games originally drummed up buzz that has since dissipated. However, a source familiar with negotiations noted that Netflix’s NFL inventory is still in an exclusivity window for top NFL sponsors and hasn't yet been made available to the general market. In particular, the high initial pricing ask—greater than $800,000 for a 30-second unit, with a minimum of $500,000 committed to non-NFL inventory on Netflix—has turned off some advertisers from buying in. Others said the timing of the games within the NFL season, and that they fall after retail advertisers have done their largest holiday pushes, lowered excitement. Look back: The top 5 holiday campaigns of 2023 “Some clients are going to want to be there in the NFL, and they’ll pony up the extra money,” said the second buyer. “Others will say, ‘I’ll pass and just go buy a game in Sunday Night.’” A unit in NBC’s “Sunday Night Football” was priced at $882,079 in 2023 per Ad Age’s TV pricing chart. Netflix has been smart in generating a calendar of live events for advertisers to its full subscriber base rather than its much smaller ad tier users. Upcoming live events include a hot dog eating competition between competitive eating superstars Joey Chestnut and Takeru Kobayashi on Sept. 2, a fight between Jake Paul and Mike Tyson on Nov. 15 and weekly WWE matches beginning next year in addition to the Christmas Day football games. But Netflix hasn’t formulated packages across its live events, according to three media buyers, who said that might drum up more demand for upfront deals. Rather, Netflix is packaging its ad inventory with non-TV assets, i.e. its in-person experiences, merchandise and owned out-of-home inventory. “That’s fine, but that just means they’re not an essential partner for the upfront,” said the third buyer. The upfront game Prior to this year’s upfront, Amazon was predicted to be the great market disruptor with the influx of streaming ad inventory from Prime Video, which launched ads earlier this year to an estimated 115 million viewers, according to Amazon. However, while some anticipated the streamer would steal upfront share from other media companies as budgets remain flat to down, “The Amazon Effect,” as the second media buyer called it, hasn’t played out in the streamer’s favor, and its top rank as an upfront must-have has quickly fallen. “[Amazon] clearly does not have a good understanding of how upfront negotiations in the video world go,” said the buyer. “In order to get [advertisers] to make a commitment to you and give you volume, you’ve got to give something back. Otherwise, we’ll see you later.” According to three media buyers, Amazon’s sports sales team closed deals quickly for “Thursday Night Football” in order to capture quickly-committed NFL ad dollars. But that has sidelined sales efforts for the rest of Prime Video. While the fourth buyer said they would likely be able to leverage their earlier “Thursday Night Football” deal in rate negotiations for Prime Video, others have said Amazon has been resistant to staying competitive with the rest of the TV market. As such, “The Amazon Effect” has been a driving force for securing better deals across the marketplace, while “Amazon’s screwed itself over,” said the third buyer. “Amazon did me a huge favor by bringing in all of this supply to the marketplace because I have now been able to right-size the pricing” for the other streamers, said the second buyer, who added that the tides could turn quickly if Amazon is able to “come to grips” with the rest of the market. “They think that how much money we give them will determine what kind of pricing we get,” said the second buyer. “I've tried to inform them in a nice way that pricing in the media world is established via supply and demand. Your supply is up, so the demand is down.”

Why streaming platforms are lagging in TV upfront deals

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