Swiftie mania finds its way into everything, even conversations around streaming consolidation.
Describing unlikely pairs, Jennifer Kohl, chief media officer of the global agency VML, compared streaming services merging to celebrity couples (à la Taylor Swift and Travis Kelce) that end up together — their combined fit is natural and makes so much sense.
In the past two years, we’ve seen multiple major streaming services consolidate and combine, from HBO Max and Discovery+ merging into Max, to Showtime folding into Paramount+, to name a few. And 2024 seems primed to be a big year for even more consolidation, with rumors regularly popping into the news.
These dynamics can also affect the strategies that media buying agencies will take into upfronts season. According to agency leaders The Current spoke with, consolidation could help fix fragmentation issues and increase scale for brands. Still, on the other side, consolidation could mean fewer players holding increased pricing leverage. These colliding factors are likely keeping leaders’ attention as potential ripple effects.
“We know [consolidation is] inevitable, and ultimately, it’s going to make it easier for us on the agency side, but it will also simplify it for our client partners,” Guy Rancourt, AMP Agency’s vice president and group media director, tells The Current.
But as Rancourt sees the potential to target fewer platforms, it comes down to supply and demand for David Campanelli, Horizon Media’s chief investment officer.
“Controlling more of the supply is always problematic from the buyer side,” Campanelli tells The Current. “The fewer sellers in the marketplace, the less competition; the less competition, the higher the pricing. It’s always good as buyers to have options to negotiate with two different entities and help drive the price down.”
Finding value in an increasingly crowded market
A decade ago, right when cord cutting was making major waves in the cable TV industry, major TV networks consolidated. Now the same is happening in the streaming world.
Since Netflix has been streaming for over 15 years, it’s easy to think of the connected TV (CTV) market as highly developed. Still, advertising is a relatively new concept in the streaming world, and ad plans have grown a dramatically bigger share since late 2022. Sticking with the laws of supply and demand, consolidation could be seen as a natural market correction after the explosion of streaming services that have launched in the past few years.
“There’s a lot of platforms today, and there’s not really demand for the volume of platforms that are out there,” Disney’s President of Global Advertising, Rita Ferro, recently told Ad Age. “And I think a lot of people may have gotten into this space because they saw it as an opportunity in a depressed market in linear to look at other ways to leverage content on different platforms. But I think a consumer has a specific amount of time that they can spend.”
Disney reported that half of new Disney+ subscribers from March to September 2023 chose the ad plan. With the average U.S. household subscribing to 5.6 streaming services, according to research from Parks Associates, the cost of streaming is adding up and is likely leading more consumers to accept ads in the name of having access to more content.
Targeting takes center stage
The most concrete example of two platforms merging around the upfronts is when Warner Bros. Discovery (WBD) debuted Max last year. In its latest earnings statement from November, WBD reported that while subscribers did go down, streaming ad revenue skyrocketed 29% year over year. As Max reaches its first anniversary in May, it’s looking to continue that success during this year’s upfronts presentation on May 15.
While the upfronts have historically evoked glitzy, star-filled presentations promoting what could be the next big network hit, the back-end technology powering the streaming operations is getting more of an applause. In fact, WBD’s Head of Digital Ad Sales and Client Partnerships, Ryan Gould, tells The Current, “Some would argue [it’s] the unsung hero in ad-supported streaming environments.”
VML’s Kohl adds that the differentiator is not just the scale a streaming platform can offer, but the targeting tools they can use to identify and unlock the right audiences. This will likely play a crucial role this year, as the summer Olympics and the upcoming presidential election in the U.S. may cast a shadow over the upfronts.
“At the core of what I do, I need to make sure that my client’s message is reaching the right person,” she says. “And it really doesn’t matter if it’s in a knitting show, a cooking show or Formula One. I just need to know it’s the right message to the right person at a fair and efficient price.”