Where Will the Video Industry Go in 2025?

As we’re closing the books on 2024, we’re seeing a video industry in significantly better shape than 12 months ago. Most of the larger streaming services have now managed to break even; a huge milestone after many years of investment. Even more impressively, many have done so by both increasing revenues as well as lowering costs. It’s encouraging to see that consumers seem more resilient than previously thought and despite significant price increases, most choose to keep their subscription services. At the same time, we’re seeing that new advertising-funded business models for SVOD services resonate with more budget-conscious consumers and offer a good stepping stone into becoming full premium subscribers. Overall, 2024 developed as I expected. If anything, the transition to profitability has been faster than what I estimated a year ago.

Being a bit more self-critical, I completely missed the live sports bundling initiatives we have seen in 2024, where several of the large global video services have experimented with adding sports into their subscriptions, clearly in an effort to tap into new groups of consumers. Surprisingly, even Netflix has started to experiment with live sports, showing that this an industry wide strategy change, which is a significant departure from where things stood ten years ago.

Reflecting on the development over the past 24 months as well as my own trend analysis from the last few years, I have identified three interesting trends for 2025 which I believe are worth exploring.

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Stabilization of the advertising market driving further industry growth.

Over the past 10 years, the traditional TV advertising market has been challenged by the market forces. As less time has been spent on traditional TV, less ad spend has been allocated to this medium, and a decades-long shift of ad spend to various digital opportunities has dominated the industry. While the advertising growth for VOD services specifically has been healthy with double digit growth, for broadcasters and networks it has not been much consolation since this growth of advertising VOD revenues has not compensated for the decline in the traditional linear TV advertising business. 

Now, with the stronger macroeconomic environment and a healthy overall streaming business trend, I believe that many companies will see their advertising revenues start growing again. While the overall revenue growth won’t be material (likely in low single digits) it is a clear indication that the worst is behind. Ad-funded broadcasters will have better opportunities for increasing investments and focus on growth rather than the cost-cutting we’ve seen over the last two years.

We’re quite far away from video advertising being a significant growth driver in the TV industry. However, just the psychology of advertising no longer being a drag on overall industry growth will lead to a change in the planning horizon and a willingness to invest in both content and technology. 

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Reevaluation of the live sports bundling strategy

In 2024, many VOD services chose to bundle live sports into their SVOD subscriptions. We’ve seen everything from Apple TV’s investment in Major League Soccer, to Amazon Prime’s foray into NFL, cricket and Premier League football, but these are only the tip of the iceberg of a clear global trend, where it seems like new licensing deals are announced every week. In summary, the investment into sports rights from VOD providers have exploded over the past 2-3 years. 

It is of course clear that live sports will increasingly be streamed rather than broadcast. It’s also clear that much of this content is extremely valuable, and rights for it will continue to be very expensive. We’re also seeing clear user attraction, where subscriber uptake from new sports rights is substantially driving revenue growth in a seemingly attractive way. However, while this will certainly add value for some viewers, it is an incredibly expensive way to add consumer value. Super fans generally move with the content, and it doesn’t necessarily lead to a long term improvement in the subscriber base. At the same time, after a season is complete, the value is gone, whereas more traditional VOD assets generate value for a long time as part of a library strategy. Sure enough, we’re seeing that churn increases after the end of a season or when a video service loses certain sports rights. The company has essentially spent a lot of money for no long term benefit.

I believe we will start to see several of the VOD providers which have experimented with sports rights abandon this strategy, or at least evaluate a better way of structuring the content to maximize the value. It doesn’t lead to the long term subscriber growth they counted on and the costs need to be justified on its own, for example with a separate “sports subscription tiers”. Such special subscriber tiers have historically been the norm when pay TV controlled most of the premium sports rights. 

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Improved content packaging in SVOD subscription design

All video services rely on “hero content” to drive interest and loyalty. Constant refresh of such hero content is important to keep users engaged and satisfied with the video service, very similar to how consumers have traditionally interacted with TV channels. Depending on a service and its target audience, the design and type of hero content will be totally different. Services with high value content with lower refresh rates, such as movies and sports, will need to use promotional activities and clear communication to communicate that value, whereas services with more content, but lower value for each item, like kids services, documentary services and other niche services, rely more on search and discovery and personalised promotions. By packaging the content and adapting the UX to that content, you can create more value for the users. Furthermore, there can be many ways of packaging content to stimulate segmentation and ultimately more revenues. Below are a few examples for illustration:

First, one of the obvious value drivers for fans is early access to content releases. This is a concept which has been discussed for years, and I think we’ll see continued experimentation in this area. What would be the viewer’s willingness to pay to get an early release of next week’s episode of their favorite series? Or maybe the entire season?

Second, an alternative way of managing content releases is to stagger release dates depending on which subscriber tier you’re on. For example, maybe only the top tier users will get access to a series on its official release date, while lower tiers will be able to view it a week or even a month later. This will likely increase the pricing power for the top tiers without necessarily removing value, and increasing churn, for the lower tiers with a more cost-conscious audience.

Third, thematic packaging of content in a subscription service is something which has historically been difficult due to the limited size of the library content. However, with more service maturity and larger libraries, it is possible to create new, lower, thematic subscription tiers. The obvious example is to provide a kids tier at a lower price point, maybe with some limitations on viewing hours or devices. Such a service could target audiences who may be interested but who are cautious of getting another full scale video service due to budget constraints. Other use cases can be documentaries or potentially only content available in certain original languages. The exact strategy will depend on content availability, subscriber demographics and experimentation (and continuous evaluation will be very important).

To conclude, as the industry has pulled itself into overall profitability, it’s time to start accelerating innovation and experimentation to deliver more value for the right price to keep consumers engaged while continuing to grow. Accedo is investing in software and services to support our customers with this innovation to allow them to position themselves for the future growth in the industry.

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