Future of TV Briefing: How the TV, streaming and digital video industry spent its summer

Summer recap

The key hits:

• Streaming steals viewership, but subscription growth slows.
• Netflix develops its ad offering.
• Programmers and producers tighten their belts.
• Short-form video platforms pinch open their wallets.
• TV advertising’s measurement overhaul ebbs.

There’s no such thing as a summer slowdown anymore — certainly not for the TV, streaming and digital video industry.

At the start of summer, questions loomed around Netflix’s advertising plans, streaming’s audience hold and how the economic headwinds at the time would affect the landscape. Meanwhile, there was also uncertainty around the TV advertising industry’s measurement shift heading into the annual upfront negotiations as well as the perpetual quandary of when short-form video platforms will start to share revenue with publishers and creators.

By the end of the solstice, some questions received answers, though some begot new queries heading into the fall and fourth quarter. For anyone who either was able to unplug over the summer or became overwhelmed with work, here is a recap of the season’s top developments.

Streaming steals viewership but subscription growth slows

Streaming is resurgent — sort of. Amid streaming’s subscriber growth deceleration in 2021, streaming’s share of TV watch time stagnated. Then, with Netflix — a bellwether as the preeminent streamer in the marketplace — reporting subscriber losses in the first quarter of 2022 and again in Q2, the concern arose of whether streaming’s rise had reached its apex. 

Nope, not yet at least. With traditional TV in its offseason over the summer, streaming’s share of TV watch time finally overtook cable TV’s share in July, having already surpassed broadcast TV’s percentage, according to Nielsen’s The Gauge report. To be fair, streaming was at an advantage, including with Netflix releasing new episodes of “Stranger Things” in July. 

However, subscription-based streamers are still facing some struggles. Netflix, in particular, had a summer to forget when it comes to subscriber growth, reporting in July that it had lost nearly 1 million subscribers. Meanwhile, Disney+’s U.S. subscriber growth slowed, and Peacock’s stagnated. Little wonder then that the fall seems set to be dominated by new attempts to add subscribers, with Netflix and Disney+ preparing to add ad-supported tiers and Paramount+ bundling up with Walmart.

Netflix develops its ad offering

Netflix’s summer wasn’t all bad news, though there was a period when it was unclear what news would come of its ad-supported plans. Early on, reports came out about the streamer assessing potential ad sales and ad tech partners, including Google and NBCUniversal, before Netflix announced in mid-July a dark-horse pick in Microsoft. 

Following the Microsoft announcement, agency executives awaited information about what exactly Netflix planned to pitch advertisers. That wait seemed likely to extend into the fall, with Netflix and Microsoft not being all that forthcoming in initial meetings. But by the end of August, the company apprised ad buyers of its pitch, namely that it planned to charge plenty of pretty pennies for its ads running before and during some programs without any third-party measurement at the outset. 

Additionally, Netflix finally appointed former Snap executives Jeremi Gorman and Peter Naylor to oversee its advertising business, closing the season with answers to some of the biggest outstanding questions and raising a new one: To what extent will advertisers buy what Netflix is selling, especially amid an economic downturn?

Programmers and producers tighten their belts

Yep, the economic downturn. As temperatures warmed, the financial landscape turned cold with rising inflation, rising interest rates and continuing supply-chain challenges. These macroeconomic conditions threw some cold water on the TV and streaming advertising marketplace, with connected TV platform owner Roku reporting a slowdown in ad spending in Q2 and forecasting more of the same in Q3. 

But it isn’t only the ad market that has been impacted. The programming market has also taken on water. Companies including Netflix, Warner Bros. Discovery, Roku and Snapchat are trying to cut costs, and that has included cutting back on original programming investments and cutting new deals that can provide more rights to producers. However, producers are similarly combating rising production costs that pose a challenge to them capitalizing on market conditions. 

With all of this financial friction around programming and production, the recent spree of new shows saturating the TV and streaming landscape may mean “peak TV” has finally peaked in 2022, as FX CEO John Landgraf predicted in August.

Short-form video platforms pinch open their wallets

Amid all the cost-cutting, short-form video platforms like TikTok and Instagram Reels did open up new money-making opportunities for creators and publishers, albeit not to the degree that video makers have been hoping for for the past couple years.

In June, TikTok started testing its ad revenue-sharing program TikTok Pulse, which effectively operates as a post-roll program with eligible creators getting a cut of the money from ads running after their videos. And Instagram extended its program paying bonuses to Reels creators to more publishers.

However, neither TikTok nor Instagram — nor YouTube for that matter — have fully opened up revenue-sharing programs for short-form video makers. And in some cases, the platforms took monetization opportunities off the table. TikTok shut down its shopping plans in the U.K. and U.S., and Instagram ended its affiliate program for creators. 

So despite some anticipation among creators and publishers that the announcement of TikTok Pulse in May would finally open the short-form monetization floodgates, the money flow remains a trickle.

TV advertising’s measurement overhaul ebbs

One area of the industry seemingly left in tact since spring was TV advertising’s measurement overhaul. This shakeup is still in process, but it did not exactly transpire over the summer in this year’s upfront negotiations.

While advertisers and agencies agreed to test out non-Nielsen measurements as part of their latest upfront agreements and NBCUniversal reported that more than 40% of its upfront deals would not use the traditional age-and-gender measurement as their currency, Nielsen still emerged as the primary measurement currency for the marketplace. 

Then again, even Nielsen’s own efforts to update its measurement system have stalled. The measurement provider had planned to start rolling out Nielsen One in the fall. But in August Nielsen notified advertisers that the product was not yet ready to be used as the basis for transactions. Additionally, the company is still awaiting reaccreditation from the Media Rating Council, leaving wide open the window of opportunity for alternative measurement providers to start to seize share of the marketplace through tests in Q4 through early next year. 

Stay tuned.

What we’ve heard

“HBO Max came out very high and quickly lowered pricing throughout the year and rolled back pricing in the upfront. My guess is it will be a similar story [with Netflix]. If they have inventory to sell, it will be challenging to maintain that CPM.”

— Agency executive on Netflix initially pitching a $65 CPM for its upcoming ad-supported tier

Numbers to know

25 million: Number of people who streamed “The Rings of Power” on Amazon Prime Video in the first 24 hours after its premiere on Sept. 1.

67%: Percentage share of Hulu subscribers that are on the service’s ad-supported tier.

$11.99: Monthly price for Paramount’s bundle of ad-supported Paramount+ and Showtime.

-44%: Percentage discount on video ads bought through programmatic open auctions compared to traditionally purchased video ads.

What we’ve covered

How CBS News’ co-presidents Neeraj Khemlani and Wendy McMahon are stepping up their streaming news outlet:

• Former “Face the Nation” host John Dickerson will anchor a nightly news show on CBS News Streaming Network.
• With the launch of CBS News Detroit, the streamer expects to have nearly 46,000 hours of live local coverage by the end of 2022.

Listen to the latest Digiday Podcast here.

Ad buyers are stunned by Netflix’s ad-supported pitch:

• Netflix is asking advertisers to pay a $65 CPM and commit to spend at least $20 million on the streamer.
• The company is not initially offering third-party measurement.

Read more about Netflix’s ad sales pitch here.

What we’re reading

Comcast’s TV cuts:
NBCUniversal’s parent company plans to cut up to $1 billion in costs from its TV networks to likely reinvest that money in its Peacock streaming service as well as its theme parks business, according to Bloomberg.

Snap’s original programming exit:
In another cost-cutting move, the Snapchat owner has decided to stop funding new original shows for the mobile app, according to The Verge.

TikTok’s CTV strategy:
The short-form vertical video platform is continuing to assert its position on the big screen by planning to hire a product manager to help boost its CTV presence, according to Ad Age.

Nielsen’s big data setback:
Nielsen’s plan to supplement its panel-based measurement with data from set-top boxes and smart TVs has hit a roadblock, and its Nielsen One measurement system isn’t ready to serve as a currency for TV ad buys, according to Broadcasting & Cable.