One year ago, we began our first annual One year ago, we began our first annual AlixPartners Media & Entertainment Industry Predictions Report by stating that “the media and entertainment industry has always been a poster child of creative destruction.” Fast-forward to year two, and that sentence still rings true—in fact, the destruction and Fast-forward to year two, and that sentence still rings true—in fact, the destruction and competition may have only grown fiercer. AI advances have made major inroads in the past year and will continue to serve as the major technological force disrupting business and operations across the media industry. From a creative perspective, AI has further penetrated the TV and film sectors, where practical, easy-to-implement use cases with measurable outcomes will lead the way in 2025. But we don’t expect the technology to replace human talent; it should only enhance creative output. AI is also disrupting the video gaming, casino gaming, sports betting, and search markets, shifting traditional business models to meet consumer preferences. Legacy media and advertising businesses are seeing a similar need to transform business Legacy media and advertising businesses are seeing a similar need to transform business models as subscription revenue moves from Pay TV to streaming, while advertising revenue moves from linear to digital. The continued rise of retail media will evolve where companies place their ad dollars to match consumption habits.

We lay out our second annual AlixPartners Media & Entertainment Industry Predictions Report across seven chapters. As we enter 2025, we believe our core predictions will shape the future direction of the industry: 01. STREAMING WARS: The battle over 04. AI IN CREATIVE INDUSTRIES: the next generation of TV Enhancing, rather than replacing, human 1 Streaming subscriptions purchased through wholesale creativity in TV and film distribution will rise to 60-70% in mature markets, driven AI will transform the production cycle—not by eliminating by the growing momentum of bundling and aggregation. creative jobs, but by redefining roles and sparking new Over time we expect to see three to five “central hubs” synergies between creative teams and technology. emerge as leading distributors, but in 2025, we will see In fact, we predict that in 2025 there will be a lack of several new deal partnerships as the industry experiments creatives with the expertise and skills required to use the 2 with consolidating streaming services. new AI tools available. Experimental bundling partnerships among direct-toconsumer (DTC) platforms are early indicators of broader 05. RETAIL MEDIA'S NEXT FRONTIER:

ips as the industry experiments creatives with the expertise and skills required to use the 2 with consolidating streaming services. new AI tools available. Experimental bundling partnerships among direct-toconsumer (DTC) platforms are early indicators of broader 05. RETAIL MEDIA'S NEXT FRONTIER: 3 industry consolidation coming in 2025. Transforming the advertising landscape Traditional Pay TV subscribers in the U.S. will drop below 50 million in 2025—less than half of what they were just As advertisers continue shifting budget towards digital, a decade ago. Meanwhile, virtual multichannel video the convergence of the streaming services and retail media programming distributors (vMVPDs) are approaching their trends, coupled with the global expansion of retail media peak before entering a period of decline after 2025, driven networks, will accelerate disruption within the by the rapid shift of live sports to DTC platforms, evolving media industry. consumer behavior, and rising costs. 02. SPORTS BETTING AND CASINO GAMING: Fund tech investments or face marginalization There will only be room for three to five dominant players within the online sports betting and iGaming industries to successfully invest at scale and grow. As others fight for market share, we predict at least one company will be forced out of the competitive arena. 06. THE FUTURE OF SEARCH: AI-driven disruption and diversification OpenAI, Perplexity, Amazon, and TikTok will gain further traction, signaling a new era of competition in the search industry. Google's share of the search advertising market will continue to shrink, decreasing by low single digits. 07. M&A IN MEDIA:

EARCH: AI-driven disruption and diversification OpenAI, Perplexity, Amazon, and TikTok will gain further traction, signaling a new era of competition in the search industry. Google's share of the search advertising market will continue to shrink, decreasing by low single digits. 07. M&A IN MEDIA: 03. BEYOND THE CONSOLE: An environment ripe for dealmaking Video gaming's cloud revolution 1 Reduced regulatory scrutiny and a lower cost of capital will generate a rebound in evaluation of media Both gaming console and PC hardware sales will decline, 2 consolidation deals. as consumers choose to spend instead on displays and On top of Comcast’s proposed carve-out of NBC cable streaming devices. assets, we will see at least one more cable network carve-out this year.

01. STREAMING WARS: The battle over the next generation of TV AUTHORS OF THIS CHAPTER: Jeff Goldstein, Mark Endemaño, Lexie Perrotta, and Katarina Milen 01. Streaming wars: The battle over the next generation of TV 4

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) FIGURE 1: In 2025, global streaming revenues for SVOD & AVOD streaming platforms like Disney+ and services will surpass $165 billion Paramount+ reporting profitability in 2024, the economics of streaming remain a challenge. Platforms face a complex landscape, driven by: Global SVOD & AVOD Revenues ($B, USD) 1 Subscriber churn: Fragmentation has fostered Forecast serial churning, with 42% of subscribers CAGR (%) regularly subscribing, canceling, and 2024-2028 resubscribing to streaming services. These +7% churn cycles directly impact revenue stability, 197B subscriber growth, and long-term profitability 176B $186B +13% 2 for streaming platforms. +22% $165B Rising content costs: Disney, Comcast, $152B YouTube, Warner Bros. Discovery, Netflix, and $135B Paramount Global will collectively spend 126 113B +5% billion on content in 2024, a year-over-year $95B