Streaming wars: The battle over the next generation of TV

aThis is the first chapter of our 2025 Media & Entertainment Industry Predictions Report. You can find the full report here. 

Pay TV is (nearly) dead; long live Pay TV

The global television industry is undergoing a seismic transformation as streaming’s rise accelerates the decline of traditional Pay TV. However, the streaming market is still evolving toward a more stable state. In 2025, global subscription video on demand (SVOD) and advertising-supported video on demand (AVOD) revenues will surpass $165 billion worldwide. But the current ecosystem is highly fragmented with more than 200 streaming platforms, far more than the market can sustain in the long run. 

Despite major direct-to-consumer (DTC) streaming platforms like Disney+ and Paramount+ reporting profitability in 2024, the economics of streaming remain a challenge. Platforms face a complex landscape, driven by: 

1. Subscriber churn: Fragmentation has fostered serial churning, with 42% of subscribers regularly subscribing, canceling, and resubscribing to streaming services. These churn cycles directly impact revenue stability, subscriber growth, and long-term profitability for streaming platforms. 
2. Rising content costs: Disney, Comcast, YouTube, Warner Bros. Discovery, Netflix, and Paramount Global will collectively spend $126 billion on content in 2024, a year-over-year increase of 9%. 
3. High subscriber acquisition costs: Streamers face significant costs in acquiring new subscribers through marketing, promotions, and partnerships, making it increasingly essential to achieve greater scale. 
4. Platform taxes: Third-party billing systems like Apple App Store or Google Play take a 15-30% cut of subscription revenue for SVOD transactions that are managed through their ecosystems.

Infinite choice is really no choice at all

Streaming, once celebrated for its promise of choice and freedom, has become a double-edged sword for many consumers. Increasing pain points related to the user journey, content discovery, and pricing are limiting convenience for users. 

This dissatisfaction is underscored by the “paradox of choice”: With a plethora of content fragmented across platforms, viewers spend excessive time—more than 11 minutes on average—deciding what to watch, often unaware of the full breadth of content available. Alarmingly, only 28% of Americans and 21% of Europeans feel they can easily find something to watch, according to Comcast’s “Content Discovery in a Multiscreen TV World” report. This indicates a deeper issue of content discoverability, both within individual apps and across multiple streaming services, leaving users frustrated and overwhelmed. 

Fragmented customer relationships across multiple services make it challenging for consumers to keep track of their subscriptions, further eroding viewer satisfaction—especially as major SVOD services have raised prices by more than 50% on average since their launch. These hikes have led to an increase in the à la carte price of subscribing to three or more premium SVOD services by more than 30% in recent years.

In response to these challenges, streaming services are experimenting with various promotional pricing strategies, bundles, and a turn back to wholesale distribution models. These strategies may be new to streaming, but they increasingly resemble the tried-and-true traditional Pay TV models they sought to disrupt. 

Yet, despite pain points with streaming, consumers haven’t forgotten about the shortcomings of rigid “all-in-or-nothing” Pay TV bundles, including long-term contracts and paying for hundreds of largely unwatched channels. Traditional Pay TV is declining for a reason, but for consumers to move forward into the future, they need a solution that combines the freedom and flexibility of streaming with the simplicity and ease of the past.

Momentum for streaming bundles is a step, but not the final destination

Streaming bundles and wholesale distribution partnerships surged in 2024 as players sought to expand their reach and improve subscriber retention. In our 2024 predictions report, we projected that subscriptions purchased through telco and aggregator bundles would surpass 50% in mature markets like the U.S. 

The streaming distribution ecosystem is increasingly complex, comprising various bundles and third-party aggregation services. In 2024, the number of documented telco and online video distribution partnerships worldwide rose to more than 2,000, up from 1,200 a year ago. 

While this growth highlights the importance of bundling and aggregating content for subscription video economics, it has also added complexity for consumers in the near term. 

Consumers must now navigate numerous distribution options for streaming, which come with a wide range of value propositions to consider: 

• Single-company bundles combine multiple services owned by the same parent company, offering them at a discounted rate through a unified bill. Most have become integrated platforms like Paramount+ with Showtime or Hulu on Disney+. 
• Co-subscription bundles include two or more competing DTC streaming services in a single discounted package billed together. However, they do not provide a unified user interface. As a result, consumers must navigate between individual apps to access content from different services. 
• Operator bundles, offered through telecom operators, combine streaming subscriptions with traditional cable, broadband, or mobile services, often at a discounted rate or included as complementary perks. These bundles are typically available only to existing customers and feature a limited selection of streaming providers, often restricting access to their ad-supported tiers. 
• Third-party aggregators like Amazon Prime Channels and YouTube Primetime Channels act as resellers of premium DTC streaming services, consolidating multiple apps into a single interface. Unlike other bundles, super-aggregators generally don’t offer discounted rates compared to purchasing services directly. Instead, their primary value lies in convenience, with unified subscription management and no need to switch between multiple apps.

In 2025, the streaming ecosystem will continue to lean into wholesale distribution

We predict that subscriptions purchased through wholesale distribution will rise, reaching as much as 60-70% of streaming subscriptions in mature markets—up from our 50-60% prediction last year. 

This growth will include subscribers gained through third-party aggregation services led by Amazon Prime Channels and Roku Channels, as well as broadband operators like Comcast (Xfinity, Sky) and Spectrum (Charter), and mobile operators like Verizon. 

Over time, we expect to see three to five winners emerge as “central hubs” for the next generation of TV. In the meantime, 2025 will reveal several new deals as the industry experiments with consolidating streaming platforms through bundling and aggregation.

Simultaneously, rising tension between content owners and third-party distributors will persist, driving DTC players to push back against platform taxes and the rise of third party gatekeepers. As a result, we expect to see more co-subscription bundles—similar to the Disney+, Hulu, and Max bundle—emerge in 2025. 

These “frenemy” bundles enable DTC players to offer greater value and convenience to consumers without sacrificing critical competitive advantages. By partnering directly with other DTC platforms, they can retain direct control over the consumer relationship, a larger share of subscription revenues, and access to valuable viewer data— tradeoffs they might forgo through wholesale partnerships with third-party aggregators. 

However, while current bundling efforts are a step in the right direction toward a more simplified and streamlined viewing experience, they are not enough to be game-changing for the industry. We believe that experimental streaming bundles are early indicators of consolidation, which we expect will begin to play out in 2025. Bundling allows streamers to test for potential revenue synergies and operational alignment in a controlled, lower-risk environment before committing to large-scale integrations. 

The market can realistically support only a limited number of profitable distributors, creating increasing competition as DTC platforms, telco operators, and third-party aggregators all vie to deliver the ultimate streaming experience. 

Winning players will combine flexibility and choice with the simplicity that consumers crave—such as seamless user experiences, unified search and discoverability, and a single interface and billing system. 

As we head into 2025, the streaming wars are only heating up. We will be watching closely as new developments unfold in the battle over the next generation of TV.

Traditional MVPDs aim to transform into next-generation streaming hubs

Traditional multichannel video programming distributors (MVPDs) are at a critical crossroads as the decline of legacy TV subscriptions accelerates. 

According to AlixPartners’ proprietary cord-cutting model, U.S. Pay TV subscribers are projected to decline by 10% in 2025, shrinking the total number of subscribers below 50 million—half of what it was just a decade ago. 

As the decline of legacy TV subscriptions accelerates, traditional MVPDs are taking aggressive steps to adapt. 

We predict that traditional MVPDs will reinvent themselves as leading wholesale distributors in a streaming-centric world, becoming go-to hubs for the next generation of TV. 

To adapt to shifting consumer preferences, MVPDs will need to dismantle the traditional Pay TV bundle and embrace a new role that prioritizes flexibility, personalization, and streaming content variety. Early initiatives like Xfinity’s StreamSaver bundle—which offers internet customers Netflix with ads, Peacock with ads, and Apple TV+ for $15 a month— illustrate this strategic pivot. 

By combining high-speed internet connectivity with access to multiple streaming platforms at competitive price points, MVPDs can leverage their existing infrastructure and customer relationships to provide a seamless, integrated streaming experience. This approach will help them compete against major digital distributors like Roku and Amazon. 

We may also see the rise of highly customizable packages that allow customers to tailor their bundles by selecting preferred streaming services alongside broadband, wireless, or mobile offerings. An early example is Verizon's myPlan, which offers the Disney bundle of Hulu, Disney+, and ESPN+ for $10 a month, providing significant savings compared to subscribing to these services individually.

2025 will mark the peak of virtual multichannel video programming distributors (vMVPDs)

Our cord-cutting model predicts that 2025 will mark the peak of vMVPDs before entering a period of decline. This projection is driven by several transformative shifts in the television landscape.

The waning competitive advantage of vMVPDs

Initially, vMVPDs attracted viewers by providing a cable-like experience at a lower cost and with greater flexibility. They provided an essential alternative for viewers seeking live content, such as sports and news, not available on SVOD platforms. However, as more content, particularly sports and news, moves toward streaming platforms, the vMVPD value proposition will begin to erode. 

The disruption of DTC sports streaming

We anticipate that the launch of ESPN's flagship streaming service in early fall 2025 will significantly disrupt both traditional cable providers and virtual MVPDs.

As one of the last mainstays of live content exclusive to Pay TV, sports have been a critical driver of vMVPD subscriptions. Upon its launch, ESPN's direct-to-consumer offering will allow fans to access premium sports content independently of vMVPDs or traditional cable subscriptions, undermining one of Pay TV’s last remaining value propositions.

Beyond ESPN, deep-pocketed tech companies like Amazon, Google, and Apple are actively acquiring sports broadcasting rights, often paying premium prices to secure exclusive deals. Prime Video, for instance, recently landed a landmark 11-year deal to stream NBA and WNBA games, becoming the exclusive streaming service for 66 regular-season NBA games beginning in 2025. This deal and ones alike pose a direct challenge to vMVPDs like YouTube TV, which has built a significant portion of its growth on sports content.

YouTube TV, with an estimated 18 million subscribers and a 40% share of the vMVPD market, owes much of its growth to its $2 billion annual deal for NFL Sunday Ticket, which allows streaming of out-of-market games across the U.S. Approximately 41% of Sunday Ticket subscribers who purchase the add-on also become new YouTube TV customers. However, as more sports content shifts to DTC platforms, YouTube TV and other vMVPDs will face growing challenges in retaining subscribers and maintaining their market share. 

The rise of vMVPD alternatives is further accelerated by broadcasters like CBS and NBC, who are partnering with their respective streaming platforms, such as Paramount+ and Peacock, to provide live sports and other premium content. With the combination of over-the-air (OTA) broadcasts and streaming services, consumers can increasingly assemble their own content packages, focusing on what matters most to them.

In 2025, vMVPD will peak 

We project that vMVPDs will experience moderate growth in 2025, driven primarily by ongoing cord-cutting trends. However, the rapid shift of live sports to DTC platforms like ESPN’s flagship service, coupled with changing consumer preferences and rising costs, will mark a tipping point. Beyond 2025, vMVPDs are expected to decline as their competitive edge continues to diminish.

For vMVPDs to remain competitive, they must innovate their offerings to align with the demands of a rapidly evolving media landscape.