What’s going to TV be like in three years? Insiders predict future

The media trade is in the course of change. There’s little doubt legacy cable TV will proceed to bleed hundreds of thousands of subscribers every year as streaming takes over as the first manner the world watches tv.

Nonetheless, the main points of what is about to occur to a transitioning trade are unclear. CNBC spoke with greater than a dozen leaders who’ve been among the many most influential decision-makers and thinkers within the TV trade over the previous 20 years to get a way of what they assume will occur within the subsequent three years.

CNBC requested the identical set of questions to every interviewee. The next is a sampling of their solutions.

In three years, will legacy TV successfully die?

Peter Chernin, The North Street Firm CEO: It’ll proceed to be in decline. It is going to be crappier. Budgets will get reduce. Extra scripted programming will migrate away to streaming. There will probably be extra repeats. However it’s going to live on. One of many actually fascinating questions right here – this will probably be fascinating – the core of linear TV is sports activities rights. The NFL deal begins subsequent season and is double the value of the earlier one. That may suck much more cash out of programming budgets. You then’ve acquired the NBA deal, these renewal talks will occur this yr. That may in all probability double in value. So you’ve got acquired growing costs of probably the most high-profile sports activities and declining variety of houses watching. That may eat away at all the things else.

Kevin Mayer, Candle Media co-CEO: It solely has just a few years left. It is nearing the tip. For leisure that has no have to be considered at any particular time, that is already accomplished. It is already largely shifted to streaming. Subsequent would be the finish of scripted programming on broadcast networks. There’s zero want for that. That is going to come back to a detailed within the subsequent two or three years. When ESPN lastly pulls the plug, the bundle is successfully over. And that can occur comparatively quickly. Linear TV is in its last demise throes.

Barry Diller, IAC chairman: It is dying, however whereas syndication is round, even when its diminished, it’s going to nonetheless be right here. The tail finish of this stuff lasts for much longer than anybody predicts.

Ann Sarnoff, former Warner Bros. chairwoman and CEO: The linear bundle will certainly be round in three years, however the variety of subscribers will proceed to say no, and the typical age of the viewers will proceed to extend steadily. One massive X issue concerning how the cable channel universe evolves will probably be sports activities and the way massive a job streaming providers play in sports activities. The fragmentation of sports activities rights is nice for the leagues however complicated for shoppers. Probably the most passionate sports activities followers will subscribe to all the things and discover their sport wherever it’s, however fragmentation creates a fragile tightrope for the leagues to stroll when it comes to sustaining mass attraction and engagement, which have pushed a stellar sports activities promoting enterprise.

Invoice Simmons, The Ringer founder: Three years feels manner too quick to me. I feel it should play out prefer it has with terrestrial radio and digital audio. 5 years in the past, you may have mentioned radio would completely be useless quickly, and no one would have challenged you. But it surely’s nonetheless limping alongside even with a lot heavier competitors from podcasts, streaming, TikTok and everybody else. Even with advert markets dwindling and the promoting being way more localized, it is not near being useless but. It is like when Michael Corleone says how Hyman Roth has been dying of the identical coronary heart assault for the final 20 years. That is radio. And linear TV would be the identical manner. It’ll have a Hyman Roth demise, not a Sonny Corleone demise.

Jeff Zucker, former CNN president: It’ll live on. Clearly it’s going to have fewer subs than it does at this time. Information and sports activities will hold it alive.

Richard Plepler, former HBO CEO: Whereas linear is clearly not the wave of the long run, money movement is money movement, which implies it nonetheless hangs on to some type of life.

Bela Bajaria, Netflix chief content material officer: Since I began on this enterprise in 1996, individuals have all the time talked about linear TV dying. Positively the pie will probably be smaller in three years. However there are such a lot of individuals who watch linear TV, particularly sports activities and information. It is going to be smaller, however not gone.

Kathleen Finch, Warner Bros. Discovery U.S. networks chief content material officer: Linear TV will completely nonetheless be right here. While you take a look at the scale and scope of the linear TV enterprise, it is big. Individuals nonetheless like to sit down down as a bunch in entrance of the TV. It’s totally communal. And advertisers like it — whether or not they’re promoting a brand new film popping out or launching a automotive sale. The linear TV enterprise will probably be wholesome for a very long time. Clearly individuals’s habits are altering, however as a enterprise, it is a big, sturdy, high-margin enterprise. One of many different issues so essential about linear is it offers the monetary ecosystem to feed plenty of streaming platforms. In our group at WBD, it makes about 4,000 hours a yr of content material, and it is an enormous quantity of content material that we make to feed the networks. So much get a second life on streaming – or a primary life based mostly on what we decide. To fund the content material only for streaming is a little bit of a problem. However as a result of we actually have an ideal margin with a twin income system, we tremendous serve that viewers on linear.

Byron Allen, Allen Media Group chairman and CEO: I feel linear TV will exist for a really, very very long time. I consider that every one of those numerous platforms – they are not as an alternative of, they’re additive. Take a look at human conduct and the way we devour content material, we have solely made a richer panorama. When there was the commercial revolution, it was fueled by oil and gasoline. That is the digital revolution, and it is fueled by content material. Native TV will nonetheless be right here and far wanted. You want native information. And let’s not overlook the networks — ABC, CBS, Fox, NBC, the large 4 broadcasters — have locked up the true faith of America, the NFL, for the following 11 years. So you may be watching these networks for sports activities. Not simply on streaming. I feel that contract tells you the bundle is right here for some time.

Wonya Lucas, Hallmark Media president and CEO: I do not assume that is the demise of linear. I simply do not. I feel that linear will nonetheless be alive and thriving. I do assume there will probably be some shakeout when it comes to which providers survive and which of them do not and which of them are bundled collectively, and there will probably be some consolidation. I do not assume everybody can have independence. However I feel after we begin bundling the price of all of the streaming providers, you are trying on the identical price of a cable bundle in some unspecified time in the future.

Chris Winfrey, Constitution Communications CEO: It will not be successfully useless, however will probably be considerably dearer and have fewer subscribers. Numerous that has to do with the rising price of sports activities rights. The brand new NFL rights extension deal will generate about twice as a lot price per yr beginning within the 2023-24 season. That price is now being distributed over an more and more smaller base of subscribers, which is pushing up the general price of content material. However within the subsequent three years, there’ll nonetheless be clients who can afford it. It’s going to simply be a lot, a lot smaller and dearer. Finally there should be a restructuring of the enterprise.

In three years, which main streaming providers will certainly exist?

Ex-CNN boss Zucker: Netflix, Amazon Prime Video, Apple and the Disney suite [Hulu, ESPN+ and Disney+]. The fifth may very well be a combo of the remainders: HBO Max, Paramount+ and Peacock.

Jeff Bewkes, former Time Warner CEO: Netflix, Amazon, Disney, HBO Max. Possibly another that does not make a lot cash or is about break even and hovers close to demise.

North Street’s Chernin: All of them with the caveat that there could also be some mixture of Paramount, Peacock and HBO Max. The massive guys do not wish to purchase any of them with exception with HBO.

IAC’s Diller: There’s just one streaming service that is dominant, now and without end, and that is Netflix. However many others will exist.

Jeffrey Hirsch, Starz President and CEO:  Disney, Netfilix, Warner Bros. Discovery, Amazon … and naturally, Starz.

Candle Media’s Mayer: Apple TV+, Disney+, Netflix, Amazon Prime, Max, in all probability. Paramount+ will probably be folded in, Peacock will folded in. Possibly they will be mixed with a smaller service like Starz.

The Ringer’s Simmons: You will have Hulu, Peacock and Paramount on the market as candidates to get swallowed up by a much bigger streamer, however who’s doing it? Apple by no means does something. Amazon does not have to do something. HBO/Discovery simply went by way of two mergers in six years. Netflix by no means does something. Disney/ESPN appears extra prone to shed stuff than purchase stuff. So except Comcast goes on a loopy spending spree, I do not see something altering — I feel everybody will nonetheless be round, simply with much less staff and manner much less authentic content material.

Netflix’s Bajaria: Netflix, after all. Disney+ has such a robust library. Lots of the others will probably be fascinating. You are already seeing Showtime and Paramount+ come collectively. Does Hulu keep in Disney, or does Comcast purchase their share out? Does Warner Bros. Discovery stick with Discovery+ and HBO Max, or does it merge with one other firm? There will probably be plenty of motion and modifications within the streaming panorama. 

Will there be a cable-like bundle of a number of main streaming providers?

Candle Media’s Mayer: Sure, I feel so. I do not know if we’ll see bundles between leisure corporations, however there will probably be some model of a much bigger bundle of content material you’ll purchase at your alternative.

Aryeh Bourkoff, LionTree chairman and CEO: It is extra about self-bundling content material and different choices to generate platform and model loyalty from the patron. What I feel additionally, you will see is the eventual launch of unique premium content material to a number of platforms to raised monetize the very best content material, however probably the most profitable platform relationships will probably be self-bundled.

Ex-Time Warner boss Bewkes: I doubt it. I do not see why you’d want it. Any aggregator’s function could be taking any of the main streamers and attaching what are laggard, subscale channels. I am undecided it is compelling.

IAC’s Diller: I do assume there’ll in all probability be a extra environment friendly manner of shopping for extra streaming providers, however I do not assume will probably be analogous to the cable bundle. One central warehouse who offers with all gamers and sends one invoice — that I do not assume goes to occur. I feel will probably be considerably chopped up. However there could also be multiplicity, the place there could also be a a lot simpler solution to entry a bunch of streamers than coping with them individually.

Naveen Chopra, Paramount International CFO: I feel it’s extremely doable however not essentially inevitable. On one hand, bundles have large worth when it comes to growing acquisition prices, decreasing churn and the comfort for shoppers. It is one thing we undoubtedly embrace. We have accomplished plenty of bundles and partnerships that we have been very profitable with, whether or not that is with Sky in Europe or Walmart or T-Cell within the U.S. A broader bundle that includes a number of streaming providers might supply a few of the identical advantages. However there are two actually massive issues you need to resolve in attempting to effectuate that type of bundle. The economics is one dimension, and the opposite is the consumer interface and buyer relationship. As we speak, streaming providers have unbiased consumer interfaces and streamers wish to personal the connection with the client. So, you need to surrender some economics to be a part of that bundle and nonetheless have a manner of sharing data and sufficient management over the UI to assist construct and preserve audiences across the content material. There’s some experimentation occurring with all of this stuff, and with all kinds of challenges. However I undoubtedly assume there is a chance of a cable bundle with streaming. It takes time to evolve.

Ex-Warner Bros. boss Sarnoff: It is arduous to know the economics of how that can work. Can there be an aggregator so individuals would not need to subscribe to a bunch of various choices? The issue is all the time who goes within the center. That is the factor: most media corporations have wished to maneuver away from somebody controlling their viewers, like cable operators, and figuring out the worth of the programming. Bundling is smart from a client perspective, however as a provider, it is way more difficult. Paying one price is easier, however there’s an imperfect worth equation in there for the content material provider/programmer.

North Street’s Chernin: I do not know. A full-blown stand-alone bundle is difficult to do. There’s not an apparent aggregator who’s going to learn. Whose finest curiosity is it to subsidize losses to bundle this stuff collectively? It is fairly robust to determine the economics. The massive guys will not wish to take a reduction. It will take very complicated negotiations.

Mark Lazarus, NBCUniversal Tv and Streaming chairman: I feel bundles are undoubtedly sooner or later. It is kind of already headed in that path. What’s not there may be the power to copy the cable bundle consumer expertise. It is cumbersome, to need to go out and in of each app. It is buffering. You possibly can’t flip between any two channels, which is instantaneous. It must get to a degree the place the consumer interface or consumer expertise permits you to seamlessly enter or exit content material if we will reside as much as client expectations.

Starz’s Hirsch: Sure. In 18 to 24 months, you may begin to see a repackaging of the linear enterprise into the digital enterprise. The worth of aggregation is basically essential. You may begin to see extra individuals partnering up. Proper now, everyone seems to be seen as a channel. Finally, the large people will develop into platforms, very similar to Amazon is doing at this time. The massive guys are going to develop into platforms. You are seeing it now with Showtime as a tile inside Paramount+. Different corporations’ content material will develop into branded tiles throughout the bigger streaming platforms.

Which corporations will dominate as the principle hub of streaming?

The Ringer’s Simmons: I consider Apple would be the dominant platform due to its connectivity to consumer conduct by way of Apple TV and our telephones. They make it so goddamn straightforward; their important web page means that you can order motion pictures, see all the brand new releases, see the place you left off on any present or film you had been watching on each different platform … it is superb. That is the one streamer that acts like a one-stop store for all the things I care about. And they’ll get higher and higher at perfecting that. Plus, you may hold logging into your totally different platforms on there by way of your iPhone. It is actually good. All roads lead by way of Apple.

North Street’s Chernin: YouTube, Amazon and Apple.

Candle Media’s Mayer: There will probably be three classes. The cable guys might repackage streaming choices. They’re already doing that with their linear choices. You have acquired the telcos (T-Cell, AT&T and Verizon), and then you definately’ve acquired the large digital gamers — Google, Apple and Amazon.

Starz’s Hirsch: You are seeing Amazon develop into a platform, and Warner is now beginning to develop into a platform. Within the subsequent three years, we’ll additionally see compression know-how that can enable wi-fi corporations to be true aggregators of streaming providers — T-Cell, AT&T and Verizon. They’re going to develop into actual challengers.

Constitution’s Winfrey: There are a variety of platforms — Roku, Apple TV and Amazon Fireplace — which might be attempting to mixture streaming content material. However I feel cable has an actual benefit. It is what Comcast and Constitution are placing along with our three way partnership, Xumo. We’ll take the voice distant from Comcast, the know-how property from Sky and Xfinity, the main reside video app in Spectrum TV — you mix all that with the truth that Comcast and Constitution have a much wider array of programming relationships than anybody else available in the market. We even have a robust distribution channel to ship this working platform, each to current clients who pay for broadband and TV and new gross sales from our totally different gross sales channels — shops, platforms — to place these bins and good TV units in clients’ palms. I feel we now have the very best set of property and current relationships to have the ability to put it collectively that none of those different platforms can do.

LionTree’s Bourkoff: There hasn’t but been an aggregator that has integrated all of video, audio and gaming content material — and we do not foresee one anytime quickly. That might be the beacon for shoppers of their seek for leisure, within the broadest sense. Absent that, some other aggregation instrument would have a special definition for various clients. For instance, youthful demographics are more and more transferring in direction of short-form content material on TikTok, YouTube and different platforms. Would that be included? The definition of content material we wish to devour and the place we devour it’s all the time altering, notably in a mature, scarce setting.

Allen Media Group’s Allen: I do not know if there will probably be a major aggregator of this content material, however I do consider the patron could be very good and resourceful and can work out find out how to get their wants met at a really environment friendly value. The important thing right here is to take a look at the world’s greatest streamer, which is YouTube, and the way it’s fully free. Good luck placing one thing in that search bar and it does not come up.

What occurs to cable leisure networks? Will they be bought? Shut down? Or will it look the identical?

Paramount’s Chopra: I do assume there’s the potential for extra consolidation of cable networks over time. I feel within the close to time period, we will see an evolution of the kind and mixture of programming you see on cable networks, given the viewers declines in that space. The economics of manufacturing costly authentic content material is not going to work for each cable community. They should take a look at totally different codecs, counting on extra lower-cost content material, library content material, and so forth., however it’s going to undoubtedly evolve.

Ex-Time Warner boss Bewkes: For those who’re a community with information and sports activities, these can final. Normal leisure community subscribers and money movement will decline. Some may get bought to personal fairness to reap money movement within the three or 4 years. It is not like they will go bankrupt, however they are not good for public fairness possession.

Warner Bros. Discovery’s Finch: It is arduous for me to say as a result of issues appear to alter so shortly on this trade. One of the helpful issues is a model that stands for one thing. Manufacturers actually, actually matter. A extra generic cable community that lives on older content material does not essentially supply one thing to somebody on a nightly constant foundation. Individuals do not surf the way in which they used to. That is not likely how persons are wired to observe content material anymore. They make a decision based mostly on how they really feel. So it is true it is tougher in the event you’re extra of a common leisure community. You want extremely specialised content material. With out it, you may’t survive or drive the type of advert income that we are able to. When you might have a HGTV you might have endemic advertisers. For those who’re House Depot or Lowe’s, you need to be on HGTV.

Constitution’s Winfrey: The query comes right down to what’s the worth of the content material they’re offering? In the event that they’re offering reruns however you may’t discover it elsewhere, then it nonetheless offers worth to the client. However what you might have at this time is programmers promoting us content material at more and more increased costs and asking us to distribute that to largely all of our clients, and on the identical time, promoting that very same content material both into streaming platforms or making a direct-to-consumer product themselves at a a lot decrease price. And plenty of of these providers have a a lot decrease safety threshold than cable, so clients are capable of share passwords and entry the identical content material free of charge. So, our willingness to proceed to fund that for programmers when that content material is on the market free of charge elsewhere is declining. Meaning throughout the linear video assemble, you may see an growing variety of distributors deciding it not is smart to hold sure content material, as a result of clients are already can entry it both free of charge in a pirated vogue or simply paying for it at a decrease price.

NBCUniversal’s Lazarus: I do not assume it is a one-size-fits-all technique sooner or later. I feel we’ll see some networks mix, like we have accomplished. Some will shut down that do not make significant contributions to the underside line. There’s so many networks at this time. Even with the erosion of the pay-TV bundle right down to 50 million, these networks are nonetheless a significant contributor of income and EBITDA to corporations like ours. So closing them is not essentially an ideal reply since you’re giving up revenue. Even when it is a declining revenue, it is nonetheless revenue. I feel that half will get misplaced a bit within the dialog now. Sure, we’re managing a decline and streamers are there to make up for misplaced income and profitability, however these companies nonetheless kick off, in lots of circumstances, a whole lot of hundreds of thousands of {dollars} in revenue. Firms simply do not give that up.

What’s one factor that can develop into a TV commonplace that does not exist at this time?

North Street’s Chernin: Windowing. That is the more than likely change. Proper now, the present financial mannequin is 2 issues: pure vertical integration, the place you produce and personal all the things, and long-term unique licenses. Neither make sense. You possibly can’t produce sufficient good content material and it is wildly overexpensive. What is the worth of 5- to 10-year-old reveals? Proper now, an enormous amount of cash is spent for these reveals. Media corporations could be higher off doing three-year licenses and saving 20% to 30% on the fee. Cable networks will probably be taken with shopping for previous reruns from different streaming platforms. It’s going to be brand-new programming to a special viewers. What defines programming is what’s new. When “Sopranos” aired in syndication on A&E, it is did not make HBO any weaker. You may see streamers begin promoting programming to cable and to at least one one other, and it’ll produce worth each to the corporate that owned it and the corporate that purchased it in syndication.

The Ringer’s Simmons: I consider Apple, out of nowhere, will begin making their very own superior televisions which have Apple TV embedded in them. It is type of unbelievable that this hasn’t occurred but. They’ve each different piece of the streaming puzzle in place — actually, all of it — apart from the precise TV. Why would they need Samsung, LG and whomever else to maintain innovating on their good TVs and ultimately reduce Apple out of the complete ecosystem? They’re going to simply make a greater TV and crush them. I want I might guess on this.

Ex-Warner Bros. boss Sarnoff: A “metaverse” which presents commerce, gaming, social interplay, sports activities, information and leisure is inevitable, however I feel we’re fairly a methods from that being the first manner individuals devour media. It is going to be fascinating to observe the metaverse evolve in parallel to streaming and different direct leisure choices. The providing that finest engages and entertains the patron will win.

Ex-CNN boss Zucker: The flexibility to guess and/or gamble when you’re watching sports activities on TV will probably be a lot simpler. You’ll undergo the TV to position a guess with a distant management, or your voice. It requires partnership from the betting corporations, however that should not be an issue.

Starz’s Hirsch: Content material with out borders. Synthetic intelligence know-how will make subbing and dubbing of content material easy. AI will let you watch content material in your house language with out a third-party dubbing it for you. The world shrinks that manner from a content material perspective.

Netflix’s Bajaria: Extra individuals could have entry to unbelievable world tales on demand. The common particular person will acquire entry to extra content material than ever earlier than.

Leisure Studios’ Allen: I feel we will see extra AI built-in into content material, and it should be extra intuitive, so when individuals watch the content material it’s going to be much more superior in recommending content material for you. I feel AI goes to assist perceive the contact factors in content material and find out how to make it higher and extra compelling and interesting.

Constitution’s Winfrey: Unified search. You may have a discovery and advice engine mixed with a voice distant that permits for a seamless expertise for the client residing inside a single platform. That may enable a viewer to select and select what content material they need month to month — both reside video or streaming.

LionTree’s Bourkoff: Sports activities is being unlocked in an enormous manner. It is the final main bastion of content material that have to be watched reside, which begs a special method. As homeowners of helpful IP, skilled sports activities leagues could more and more go direct, both on their very own or through a partnership mannequin, and monetize in different methods — from promoting and sponsorships to commerce and experiences, together with gaming and sports activities betting. We’re witnessing early levels of this dynamic with offers like “NFL Sunday Ticket” on YouTube and the MLS take care of Apple TV.

Warner Bros. Discovery’s Finch: There’s something that’s starting to exist now that I am completely fascinated to see the place it goes. It is the know-how that permits viewers to decide on the content material they watch as they’re watching. Just like the Netflix present “Kaleidoscope.” Handing the editorial decision-making to followers is so seductive. It is a chance for a chunk of content material to be watched a number of occasions. There’s just some items of content material that is tried this, however the know-how is there, and it is an thrilling new improvement in content material creation and consumption. It offers the viewers an interactive solution to view this stuff. It is simply starting to be utilized and lots of people are experimenting.

NBCUniversal’s Lazarus: A lot of TV consumption is being accomplished on the most important, finest display in your house. It is all coming by way of your lounge flat-screen TV. What we see, and I feel will change over the following three years, is the quantity of customization persons are capable of need to curate their very own talents and to bundle themselves. How do you order your streaming apps? Whereas it is not a seamless consumer expertise to go between Peacock and Netflix or one thing else, you may place them in no matter order you need on the display. The diploma of customization is there. That is coming to the person streamers, too. We’re engaged on plenty of customization for our shoppers. Customers wish to have that interactivity. For those who’re on a reside sports activities channel, you may curate your individual replays after which bounce again to reside. It is the following iteration of interactivity.

WATCH: CNBC’s full interview with IAC Chairman Barry Diller

Disclosure: CNBC is a part of NBCUniversal, which is owned by Comcast.