Chart of the Week (Jun. 27) - Historic and In-Market 30-Second Ad Spot Rates

Something that we’ve been watching closely over the last few months has been the growing presence of streaming platforms competing for sports rights – not only for the increased reach and consistent viewership that premium live sports provide – but also for their ability to support advertising monetization. For this week’s Arctos Insights Chart of the Week, we highlight current advertising inventory pricing and what that suggests about the value of sports rights.

In addition to the well-documented challenges that linear TV faces – continued cord-cutting resulting in the decline of affiliate revenue – networks are also encountering a weaker advertising market. One reason is a glut of new advertising inventory as every major streaming service now offers an ad-supported product. According to some estimates, digital video, which includes connected TV, social video and online video, is expected to generate 52% of total advertising this year versus 48% for linear.

According to some estimates, digital video, which includes connected TV, social video and online video, is expected to generate 52% of total advertising this year versus 48% for linear.

Sports have remained resilient, and, at this year’s advertising upfronts and at last week’s Cannes Lions, were front and center amongst distributors and advertisers alike.

Sports-heavy streaming services – such as ESPN+ (portfolio includes UFC, NHL, MLB, NBA, Golf, and Tennis) and Warner Bros. Discovery 's Max (portfolio includes NBA, MLB, NASCAR, and NHL) – are currently in-market with more expensive advertising inventory. Amazon Prime and Netflix , which were both first time participants at upfronts, have leveraged their NFL television rights (Thursday Night Football and a Christmas double-header, respectively) to secure advertising commitments.

Sports provide unique inventory for streaming services to showcase to advertisers: (i) they consistently generate consumer awareness, especially in a crowded streaming landscape; (ii) they habituate usage of a streaming service given the regularly scheduled programming; and (iii) they are a clear signal to advertisers of streaming networks' commitment to generating consistent advertising inventory. Even less premium events (i.e., Jake Paul-Mike Tyson boxing match) attract niche audiences, which creates more inventory for targeted audiences.