Warner Bros. Discovery
WBD
has kicked off 2023 with an alternative approach to audience measurement. The company has signed a deal with VideoAmp to measure its audience as an alternative means of data for advertisers.
The deal comes ahead of the 2023 upfronts and has the Hollywood studio looking to better measure cross-screen campaigns with the aim to secure long-term commitments from advertisers.
While about $60 billion to $70 billion is spent annually on U.S.
linear TV advertising
, according to Insider Intelligence, streaming ad revenues are steadily growing. Ad revenues for streaming services are expected to exceed $21 billion in 2023, up from nearly $17 billion in 2022, according to Insider Intelligence.
The deal comes following the completion of Warner Bros. Discovery’s test-and-learn for alternative measures of video ad performance. With the agreement, the media company will utilize VideoAmp’s full measurement suite and data capabilities to better represent audiences for advertisers transacting on linear, streaming video and digital and social media services through a unified cross-platform currency.
The process has grown more complex as streaming, social media and digital outlets have surged — across a much broader distribution dashboard — and traditional linear viewership has declined.
The deal also gives Warner Bros. Discovery another data set to provide to advertisers at a time when the industry is considering alternatives to legacy measurement firm Nielsen. Nielsen’s metrics came under scrutiny with concerns rising during the pandemic regarding inaccuracies and irregularities in its measurement.
Firms like Nielsen and VideoAmp offer audience estimates and data that TV networks and streamers use to sell slots for commercials.
Warner Bros. Discovery, Inc. Price and Consensus
Warner Bros. Discovery, Inc. price-consensus-chart
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Warner Bros. Discovery, Inc. Quote
WBD Takes Corrective Measures to Create Profitability
The merger between Discovery and Warner Media closed in 2022, amassing a portfolio of TV networks, including the Discovery Channel, TLC, TNT, TBS and others. The merged company plans to roll out a revamped streaming platform in spring, combining Discovery+ with Warner’s HBO Max.
The company has also been in the midst of cost-cutting as it contends with a hefty debt load stemming from the merger. In the third quarter, the company incurred an operating loss of $2.19 billion compared to an operating income of $329 million in the year-ago quarter.
The company has been cutting costs by cancelling high-budget movies with an intent of shifting focus from shared-universe films toward its commercially successful stand-alone films. For this, it canceled movies like the new
Batgirl
movie,
Wonder Woman 3
and
Man of Steel 2
, while projects like
The Batman
universe and
Joker: Folie a Deux
are moving forward.
While WBD will continue using Nielsen’s measurement services, the deal with VideoAmp will give it another data set and the possibility of a more cost-efficient, stand-alone alternative for the future.
This Zacks Rank #3 (Hold) company’s solid releases for the next year include
Shazam: Fury of the Gods
(Mar 17),
The Flash
(Jun 16) and
Aquaman
(Dec 25). These movies are expected to gain significant appreciation from viewers and bolster the company’s revenues. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
HBO Max is coming back to
Amazon
’s
AMZN
Prime Video in the United States. Prime customers can sign up for HBO Max for $14.99 per month and subscribers will have access to 15,000 hours of curated premium content from the Warner Bros. Discovery family of networks.
However, high inflation, rising interest rates, high capital costs, a soaring U.S. dollar and an anticipated recession encouraged advertisers to pull ad budgets and are expected to impact top-line growth in the near term.
Paramount Global
’s
PARA
CEO Robert Bakish gave a bleak near-took outlook, suggesting that ad revenues are expected to decline by a larger percentage in the fiscal fourth quarter, following a 2% decline in third-quarter fiscal 2022.
Netflix
NFLX
and Disney are set to release their ad-tier subscription tiers in their attempt to boost declining subscriber growth and attract ad revenues.
Netflix added 2.41 million new paid subscribers in third-quarter fiscal 2022 and expects to add 4.5 million paid members in the next quarter with a 6% year-over-year increase in its average revenue per member.
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