AlixPartners’ 2025 Media & Entertainment Predictions Report

• 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 amid shrinking competitive advantage and disruption of DTC sports streaming 
• Cloud gaming vs. console gaming set for showdown that mirrors the Netflix vs Blockbuster battle that ended up killing an entire category
• Market-share war in online sports betting and iGaming will squeeze smaller providers, leaving room for three to five major players in future
• Reduced U.S regulatory scrutiny and lower capital costs will fuel interest in media consolidation deals. Firm expects at least one additional cable carve-out in 2025 on top of recent developments
• Google’s search dominance and huge slice of advertising market share will erode as challengers surge, powered by AI shake-up of the $300 billion market
• AI will enhance, rather than replace, human creativity in the TV and film industries, presenting a major opportunity for creatives who develop the expertise and skills required to use new tools 
• Agencies will double down on retail media, building in-house expertise, investing in technologies, and partnering directly with retail media networks 

 

NEW YORK (December 4, 2024) – The global media business must urgently respond to a steady migration to streaming video platforms and cloud-based gaming, as aggressive cord cutting further erodes demand for traditional Pay-TV subscriptions and video game consoles, according to the 2025 Media & Entertainment Industry Predications Report published by AlixPartners, the global consulting firm.

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. The 2025 Media Predications Report also foretells dramatic consolidation in sports betting, reflecting media’s broader dealmaking push.

“If 2024 taught us anything it’s this: media executives and investors must remain vigilant amid rapid change,” said Jeff Goldstein, a partner and managing director at AlixPartners, and co-lead of the Americas Media and Entertainment industry practice at the firm. “Disruption is hitting this industry on multiple fronts as consumer habits evolve, technology matures, underlying economics change, and advertising strategies transform. 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’ proprietary cord-cutting model also predicts that 2025 will mark the peak of virtual multichannel programming distributors before entering a period of decline. This trend is driven by the waning competitive advantage of vMVPDs and disruption of direct-to-consumer sports streaming. 

“Traditional Pay-TV subscriptions are in drastic decline as they are replaced by other forms of Pay-TV from vMVPDs and streamers,” Mark Endemaño, a partner and managing director in AlixPartners’ TMT practice, said.  Efficient distribution at scale is critical for streamer economic success. We expect an increase in various forms of bundling partnerships.”

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. “There are plenty of commercial hurdles still facing this emerging technology, but those hurdles will be cleared. At that point, we expect a rapid 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

The stakes are high in online sports betting and iGaming industries that are poised to consolidate. Over the next 12 months, there will only be room for three to five dominant 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 Environment for Deals

Expectations for consolidation aren’t limited to online sports betting. The environment is ripe for legacy media M&A, evidenced by Comcast’s recently announced spinoff of cable channels, including MSNBC and CNBC. This isn’t the end of dealmaking: AlixPartners expects at least one other such 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. The political environment could be supportive, as well.  

“The stage is set for a dynamic year in media M&A.” Grace Lee, a partner and managing director in AlixPartners’ TMT practice. “Interest rates have eased from historic highs, which will increase the availability of financing. Additionally, we see consumer buying and potential regulatory changes that could lead to a more favorable environment for deal activity.”

5. Search: Generative AI Threatens Google’s Dominance

Google is synonymous with search, claiming more than 90% of traditional search queries. But Goliath is now facing pressure from an emerging collection of Davids, such as OpenAI, Perplexity, Amazon, and TikTok, in addition to fierce regulatory forces. Google’s dominant 57% share of the $300 billion global search advertising market is projected to decline in 2025 and 2026 as a result, 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—enhancing the ability and productivity of human creatives. 

"Success will depend on how companies embrace AI, prioritizing practical applications that deliver tangible results,” Edemaño said.

7. Retail Media: Transforming the Advertising Industry

As retail media expands to include streaming services and social media, media agencies and brands face increasing operational difficulty. Evolving operating models and capabilities will be essential to manage fragmented platforms, varied ad formats, inconsistent data structures, and heightened data privacy requirements. 

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. Expansion into new regions and countries will proliferate as retailers increasingly invest in this high-margin revenue stream. 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.

Contact: 
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