An Asteroid Is About to Hit Upfronts

Netflix and Amazon are muscling into TV’s annual advertising scramble — and this time they’re going for the jugular

If the 2023 upfronts were about disruption, the 2024 upfronts are about Disruption with a capital “D.”

Last year’s events were quite literally disrupted, with striking WGA writers on picket lines outside the New York City venues and the annual presentations to advertisers blunted by a noted lack of star power, as actors proved unwilling to cross those picket lines. While companies like Disney and NBCUniversal tried to make up for it by leaning on their news and sports talent, it was nonetheless a muted week.

This year, the disruption is more figurative, but in many ways much worse: Linear TV, the linchpin of the ad business for Hollywood, is rapidly eroding. At the same time, this is the year that the streaming behemoths have decided to go for the ad jugular, with Netflix planning an “immersive” experience for media buyers and Amazon storming into upfronts only months after turning on commercials for its millions of Prime Video users, both of them joining YouTube during this critical week in New York.

In other words, linear TV is on the ropes at a time when legacy media needs it most to get over that streaming chasm. “We’re not kidding ourselves thinking this is going to be some gangbusters upfront. It’s going to be challenging again,” one ad sales chief with exposure to linear TV tells THR. Another TV ad sales chief adds that they were focused on “flexibility” and “transparency” with ad partners, basically asking them what they wanted and figuring out a way to deliver.

But some analysts have been even more bearish. “It is now clear that outside of sports advertising there should no longer be expectations of a recovery for linear TV advertising,” MoffettNathanson analyst Michael Nathanson wrote March 19. And about those sports ads: A senior executive on the buyer side of the upfronts says that they think live sports could end up being north of 40 percent of this year’s upfront spend, thanks to strong demand. But there is also an asterisk. “What we’re evaluating really closely is whether or not the traditional media companies that also have sports are trying to raise prices so much in sports in order to offset the decline in entertainment,” this exec says.

Indeed, the decline in entertainment programming is the hole in linear TV’s sinking ship. “I don’t think the networks are making as much of an effort and putting quality content on these linear channels, as they had, say, five to 10 years ago,” says media consultant Brad Adgate.

“We’ve seen it in the Nielsen ratings, but it’s not unexpected,” the buy-side source adds. “It’s been going on for years now, and there aren’t any media companies that are trying to change that trend. They’re not investing in traditional primetime entertainment.”

Streaming, however, is. But while the traditional entertainment companies lose collective billions on their direct-to-consumer platforms, the tech giants and the only truly profitable streaming platform — Netflix — are coming for their lunch.

One year after hosting a (strikeinduced) virtual upfront, Netflix is planning a massive “immersive” experience in the Chelsea Piers complex, with co-CEO

Ted Sarandos promising on the company’s last earnings call “a lot of entertainment in store” for the upfront event.

And for the first time, Amazon is pushing into upfront week, hoping to leverage the Prime Video audience (now ad-supported) to steal market share from linear.

And then there’s YouTube.

The video platform is already a behemoth (it had more than

$31 billion in advertising revenue last year), but it wants a bigger piece of the upfront pie. It has secured the closing night spot during upfront week, where executives will gladly tout its reach on living room TV sets by noting it has more viewing time than Netflix. Multiple media buyers quizzed by THR after last year’s strike-impacted upfronts cited YouTube as having the most successful presentation, in which it leaned on its top creators and a surprise appearance from NFL commissioner Roger Goodell.

But the traditional players will roar back, with a ton of star power expected, multiple executives say, which means that media buyers seeking selfies at the afterparties may get their chance this year. Whether that will be enough to pry away the digital encroachers remains to be seen. “The launch and growth of new ad-supported tiers at Amazon Prime Video, Netflix and Disney+ should pull an even greater share of dollars away from linear TV,” Nathanson argues, adding that services like Fox’s Tubi or Paramount’s Pluto are also at risk. “These new entrants may also, however, pull dollars away from what have been, to date, among the largest beneficiaries of the outflow of dollars from linear: legacy AVOD services and FAST channels.”

Or, as a top television executive worries: “There’s too much supply and not enough demand.”