Streaming Wars

This 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 alandmark 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.