NEW YORK, Dec. 04, 2024 (GLOBE NEWSWIRE) --
- Number of traditional Pay-TV subscriptions forecast to dip beneath 50 million in U.S. representing only about 35% of households vs. 85% in 2015.
- 2025 will mark the peak of vMVPDs followed by period of decline.
- Cloud gaming vs. console gaming to mirror legendary Netflix v Blockbuster battle.
- Market-share war in online sports betting and iGaming will squeeze smaller providers, leaving room for three to five major players in future.
- Reduced regulatory scrutiny and lower capital costs will fuel interest in media consolidation deals.
- Google's search dominance and huge slice of advertising market share will erode.
The report, in its second year, makes predictions across seven critical trends, offering industry players a crystal ball for better predicting how 2025 will unfold. In the 2024 report, AlixPartners forecast several critical trends now unfolding, including the streaming bundle wars, stabilization of the advertising market, and robust appetite for dealmaking being tempered by regulatory scrutiny and restrictive capital markets.
"Disruption is hitting this industry on multiple fronts as consumer habits evolve, technology matures, underlying economics change, and advertising strategies transform,” said Jeff Goldstein, a partner and managing director at AlixPartners, and co-lead of the Americas Media and Entertainment industry practice at the firm. "The business model that relies on yesterday's playbook won't live to see tomorrow.”
1. Streaming: Pay-TV Penetration Plummets; vMVPDs To Peak
A decade ago, roughly 100 million traditional Pay-TV subscribers in the U.S. represented about 85% of households. While the number of U.S. households has steadily increased since 2015, traditional Pay-TV subscriptions have shifted into reverse.
This demise accelerates in 2025. AlixPartners predicts traditional Pay-TV subscriptions will dip below 50 million next year, representing 35% of American households. Global streaming revenues, meanwhile, will surpass $165 billion. These platforms will continue bundling services, but also migrate toward additional wholesale distribution, which will reach 60-70% of the streaming pie, up from AlixPartners' prediction of 50-60% in 2024.
Additionally, AlixPartners predicts 2025 will mark the peak of virtual multichannel programming distributors before entering a period of decline, driven by the waning competitive advantage of vMVPDs and disruption of DTC sports streaming.
2. Gaming: Netflix (Cloud) vs. Blockbuster (Console) 2.0
Spending on displays and streaming devices will grow in 2025, according to the report, as cloud gaming gains momentum on the back of rapidly improving high-speed internet infrastructure, new commercial models, and improved user experiences. This momentum comes at the expense of game console and PC makers.
"This will be a critical year for building cloud-gaming capabilities across the value chain, and the industry must carefully consider where to invest,” said Matteo Carli, a partner in the AlixPartners' Technology, Media and Telecommunications practice. "We expect a dramatic shift from traditional to cloud gaming that mirrors the ten-year period when Netflix rode an adoption wave so fierce that it wiped out Blockbuster's advantage and eventually forced its collapse.”
3. Online Sports Betting: Odds Favor Consolidation
Over the next 12 months, there will only be room for three to five dominant sports betting and iGaming players to successfully grow and scale, according to the report. The sector is on the cusp of an era of tech investment that prioritizes efficiency and hyper-personalized player experiences. R&D leadership will determine the winners; those failing to invest will be swept up or forced out.
4. M&A: Ripe for Deals
The environment is favorable for legacy media M&A deals. AlixPartners expects at least one additional deal from a major network to be announced within the next 12 months. The appetite for dealmaking is spurred by several factors, including profitability pressures, upcoming debt maturities, and weak valuations.
5. Search: Generative AI Threatens Google's Dominance
Google is synonymous with search, claiming more than 90% of traditional search queries. But it is facing pressure from emerging players, including OpenAI, Perplexity, Amazon, and TikTok, in addition to regulatory forces. Google's 57% share of the $300 billion global search advertising market is projected to decline in 2025 and 2026, the report says.
6. AI: Long on Creative Potential, Short on Talent
AlixPartners expects AI will play an increasingly supportive role in transforming creative processes and the production schedule. The potential to provide new tools, redefine roles, and spark synergies is high, but will be limited in 2025 by the shortage of creatives who possess the expertise to leverage the benefits. Rather than seeing layoffs from AI integration, the report predicts AI will be deployed across TV and film for simple, measurable opportunities.
"Success will depend on how companies embrace AI, prioritizing practical applications that deliver tangible results, Mark Endemaño, a partner and managing director in AlixPartners' TMT practice, said. "No single tool can do it all. Choosing the right partners across the production cycle and having flexibility to pivot and switch providers in an evolving landscape is critical.”
7. Retail Media: Transforming the Advertising Industry
The 2025 Media Predications Report forecasts a surge of retailers strategically partnering with streaming platforms and social networks, growing their digital footprint and impact on the media world. Retail media is projected to eclipse traditional TV advertising by 2026 and reach 18% of total digital ad revenue by 2028.
About AlixPartners
AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges. Our clients include companies, corporate boards, law firms, investment banks, private equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York, and has offices in more than 20 cities around the world. For more information, visit www.alixpartners.com.
CONTACT: John Stoll
AlixPartners
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