Link to home

News from the open internet


The Hollywood strikes could disrupt the availability of premium inventory next year. But who stands to lose and gain?

Popcorn spills from a hand holding three red movie theater seats of increasing height.

Illustration by Holly Warfield / Getty / The Current

The Writers Guild of America reached a tentative deal with Hollywood’s major studios and streaming services that ended a 148-day strike that brought work on television shows and movies to a halt. The guild heralded the talks as a success and said it got the concessions it wanted, including increases in royalty payments from streaming services and guarantees that A.I. will not encroach on writers’ turf. The actors’ union, SAG-AFTRA, remains on strike.

Whatever the endgame, the impact of the double strike will likely be evident next year with a shortfall of scripted dramas in the pipeline. All this is being closely watched by advertisers as they think about their 2024 upfront deals. Industry analysts say the strike is yet another catalyst that will put more pressure on a legacy tradition — where advertisers lock in early deals with networks — that’s already been upended by the rapid rise of streaming.

“It’s going to have a downstream impact on what inventory is available and when, which may disrupt advertisers’ planned investments in flighting,” says one executive at a leading media agency. “If I had planned to be in Yellowstone streaming inventory because the episode drop date aligned with my retail seasonality, now all of that timing has been punted.”

Paramount+’s Yellowstone prequel, 1923, was indeed one of the shows to shut down production last June. The months-long standstill has slowed the production of many other shows, from streaming hits like Billions and Stranger Things, to network TV favorites like ABC’s Abbott Elementary and Disney Channel’s Bunk’d.

For network television channels, the delayed production schedule will likely unsettle their 2024 fall programming, traditionally when big, scripted shows have secured those upfront ad dollars. But that uncertainty will entail a different kind of fall line-up as the networks look to fill the gaps. Already the 2023 season is a preview of what could happen, with more gameshows, re-runs, and reality TV shows like ABC’s The Golden Bachelor.

For advertisers, too, this uncertainty means they’ll be looking for more flexible upfront deals, with more variability into how those commitments are fulfilled. “More and more advertisers — especially those that have a lot of pull and a lot of involvement in the upfronts, are starting to adopt the essentiality of programmatic advertising, especially in the connected TV world,” Joel Cox, the co-founder and SVP of strategy and innovation at Strategus, tells The Current.

“The uncertainty ahead requires an audience-centric approach rather than a content-centric strategy,” Cox said in a column for AdExchanger.

Streaming channels aren’t immune from the impacts of the strike either, but some may be better placed than others to weather the disruption. Netflix’s co-CEO, Ted Sarandos, said earlier this year that his company has “a pretty robust slate of releases to take us into a long time,” including shows and films from around the world.

Still, when it comes to assessing potential winners and losers, subscription-only models are likely more vulnerable than other models such as FAST (free ad-supported streaming TV) and AVOD models like Tubi and Pluto, if subscribers decide to cancel or diminish their subscription into a hybrid lower-cost model. “There could come a time when consumers acknowledge a lack of enough content doesn’t justify that relatively higher subscription cost. So, we look to the free, FAST models as arguably the greatest beneficiaries,” says Cox.

And if users are forced to scatter around across multiple apps — from Hulu to Pluto, Tubi to Crackle — “the only meaningful way to engage with a user cross-app/cross-content, is from a programmatic execution,” says Cox, which allows an advertiser to follow a potential consumer from Hulu to Sling, serve them an ad, all while being able to control for frequency.

And it’s not just the clients with the biggest budgets looking for this programmatic advantage. Agency executives who spoke with The Current affirm that programmatic buying is opening up the marketplace to mid-size clients at independent agencies. “We see a huge influx of them going into programmatic CTV advertising,” says Matt Duffy, the CMO of software company Pixability, which helps clients work towards brand-safe, contextually relevant ads on CTV and YouTube. “Most don’t have the funds to do the upfronts at all, so there’s already a growing need for programmatic CTV advertising regardless of the [impacts] of the strikes,” he says.

Connected to this is the deep bench of CTV inventory, another reason certain streaming platforms may fare better than linear TV. “There’s a real need for advertising on what we call the torso of CTV — the tons and tons of shows that maybe aren’t big enough to be committed to the upfronts. Some of them might be re-runs of very popular shows or movie content that has a big audience that people want to reach programmatically,” he says. “It’s less about the exact show it’s on, it’s just more about getting the reach of the right audience that they hope to engage.”

If the strike means that broadcast networks face a diminished prime time next year, they still have the saving grace of live events: a presidential election and, inevitably, mainstream live sports, which for now remain largely within the confines of linear. “The value of live sports will become even more apparent in the event of an absence of scripted content,” Dina Roman, SVP of global ad sales at Fubo, tells The Current.

Absent a full complement of scripted drama, the major networks stand ready to capitalize on the surging value of live sports across all their channels, including their streaming platforms (NBC’s Peacock; CBS’ Paramount+; Disney’s ESPN). Joining this group, Warner Bros. Discovery announced last week it would offer its full slate of major sporting events to customers of its Max streaming service.

Likewise, a sports-centric platform like Fubo “is better insulated against the strikes because of our diverse content offering, especially our robust sports content,” says Roman. While the platform is flexible with how it works with clients, enabling inventory to be bought programmatically, the economics of broadcasting live sports makes it likely to be highly sought-after inventory. “For certain events comes the need to guarantee some baseline level of commitment if you want to get in front of that audience,” she adds.

This article has been updated to reflect that the WGA agreement that was reached at 12.01 a.m. PT Wednesday, September 27th.