What will TV be like in three years? Insiders predict future

The media business is in the course of change. There’s little doubt legacy cable TV will proceed to bleed tens of millions of subscribers annually as streaming takes over as the first means the world watches tv.

Still, the main points of what is about to occur to a transitioning business 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 business over the previous twenty years to get a way of what they suppose will occur within the subsequent three years.

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

In three years, will legacy TV successfully die?

Peter Chernin, The North Road Company CEO: It will proceed to be in decline. It will probably be crappier. Budgets will get lower. More scripted programming will migrate away to streaming. There will probably be extra repeats. But it can live on. One of the actually attention-grabbing 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 worth of the earlier one. That will suck much more cash out of programming budgets. Then you have received the NBA deal, these renewal talks will occur this yr. That will in all probability double in worth. So you have received growing costs of essentially the most high-profile sports activities and declining variety of houses watching. That will eat away at every little thing else.

Kevin Mayer, Candle Media co-CEO: It solely has just a few years left. It’s nearing the top. For leisure that has no must be considered at any particular time, that is already accomplished. It’s already largely shifted to streaming. Next would be the finish of scripted programming on broadcast networks. There’s zero want for that. That’s going to return 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 loss of life throes.

Barry Diller, IAC chairman: It’s dying, however whereas syndication is round, even when its diminished, it can nonetheless be right here. The tail finish of these items 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 task streaming providers play in sports activities. The fragmentation of sports activities rights is sweet for the leagues however complicated for shoppers. The most passionate sports activities followers will subscribe to every little thing and discover their sport wherever it’s, however fragmentation creates a fragile tightrope for the leagues to stroll when it comes to sustaining mass enchantment and engagement, which have pushed a stellar sports activities promoting enterprise.

Bill Simmons, The Ringer founder: Three years feels means too brief to me. I believe it is going to play out prefer it has with terrestrial radio and digital audio. Five years in the past, you could possibly have stated radio would completely be useless quickly, and no one would have challenged you. But it is nonetheless limping alongside even with a lot heavier competitors from podcasts, streaming, TikTook and everybody else. Even with advert markets dwindling and the promoting being rather more localized, it isn’t near being useless but. It’s like when Michael Corleone says how Hyman Roth has been dying of the identical coronary heart assault for the final 20 years. That’s radio. And linear TV would be the identical means. It could have a Hyman Roth loss of life, not a Sonny Corleone loss of life.

Jeff Zucker, former CNN president: It will live on. Obviously it can have fewer subs than it does at the moment. News and sports activities will maintain it alive.

Richard Plepler, former HBO CEO: While linear is clearly not the wave of the longer term, money circulate is money circulate, 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, folks have all the time talked about linear TV dying. Definitely the pie will probably be smaller in three years. But there are such a lot of individuals who watch linear TV, particularly sports activities and information. It will probably 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. When you take a look at the dimensions and scope of the linear TV enterprise, it is large. People nonetheless like to take a seat down as a bunch in entrance of the TV. It’s very communal. And advertisers find it irresistible — 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. Obviously folks’s habits are altering, however as a enterprise, it is a big, sturdy, high-margin enterprise. One of the opposite issues so vital about linear is it gives the monetary ecosystem to feed a whole lot 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. Loads 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. But as a result of we actually have an awesome margin with a twin income system, we tremendous serve that viewers on linear.

Byron Allen, Entertainment Studios founder and CEO: I believe linear TV will exist for a really, very very long time. I consider that each one of those varied platforms – they don’t seem to be as an alternative of, they’re additive. Look at human conduct and the way we eat content material, we have solely made a richer panorama. When there was the commercial revolution, it was fueled by oil and gasoline. This is the digital revolution, and it is fueled by content material. Local 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 massive 4 broadcasters — have locked up the true faith of America, the NFL, for the following 11 years. So you can be watching these networks for sports activities. Not simply on streaming. I believe that contract tells you the bundle is right here for some time.

Wonya Lucas, Hallmark Media president and CEO: I do not suppose that is the loss of life of linear. I simply do not. I believe that linear will nonetheless be alive and thriving. I do suppose 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 suppose everybody can have independence. But I believe once we begin bundling the price of all of the streaming providers, you are trying on the identical price of a cable package deal sooner or later.

Chris Winfrey, Charter Communications CEO: It will not be successfully useless, however it will likely be considerably dearer and have fewer subscribers. Lots of that has to do with the rising price of sports activities rights. The 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. But within the subsequent three years, there’ll nonetheless be prospects who can afford it. It’ll simply be a lot, a lot smaller and dearer. Eventually 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 could possibly be a combo of the remainders: HBO Max, Paramount+ and Peacock.

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

North Road’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 perpetually, and that is Netflix. But 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. Maybe they will be mixed with a smaller service like Starz.

The Ringer’s Simmons: You 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 must do something. HBO/Discovery simply went by means of two mergers in six years. Netflix by no means does something. Disney/ESPN appears extra more likely to shed stuff than purchase stuff. So until Comcast goes on a loopy spending spree, I do not see something altering — I believe everybody will nonetheless be round, simply with much less staff and means much less unique content material.

Netflix’s Bajaria: Netflix, in fact. Disney+ has such a powerful library. Many of the others will probably be attention-grabbing. You’re 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 a whole lot 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: Yes, I believe 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 can purchase at your alternative.

Aryeh Bourkoff, LionTree chairman and CEO: It’s extra about self-bundling content material and different choices to generate platform and model loyalty from the patron. What I believe additionally, you will see is the eventual launch of unique premium content material to a number of platforms to higher monetize the most effective content material, however essentially 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 position could be taking any of the main streamers and attaching what are laggard, subscale channels. I’m undecided it is compelling.

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

Naveen Chopra, Paramount Global CFO: I believe it’s totally attainable however not essentially inevitable. On one hand, bundles have super worth when it comes to growing acquisition prices, reducing churn and the comfort for shoppers. It’s one thing we undoubtedly embrace. We’ve accomplished a whole lot of bundles and partnerships that we have been very profitable with, whether or not that is with Sky in Europe or Walmart or T-Mobile within the U.S. A broader bundle that comes with a number of streaming providers might supply a number of the identical advantages. But there are two actually massive issues it’s a must to clear up in attempting to effectuate that sort of bundle. The economics is one dimension, and the opposite is the person interface and buyer relationship. Today, streaming providers have impartial person interfaces and streamers wish to personal the connection with the shopper. So, it’s a must to surrender some economics to be a part of that bundle and nonetheless have a means of sharing data and sufficient management over the UI to assist construct and keep audiences across the content material. There is a few experimentation happening with all of these items, and with all types of challenges. But I undoubtedly suppose there is a risk of a cable bundle with streaming. It takes time to evolve.

Ex-Warner Bros. boss Sarnoff: It’s laborious to know the economics of how that can work. Can there be an aggregator so folks would not must subscribe to a bunch of various choices? The downside is all the time who goes within the center. That’s the factor: most media corporations have needed 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 rather more difficult. Paying one fee is easier, however there’s an imperfect worth equation in there for the content material provider/programmer.

North Road’s Chernin: I do not know. A full-blown stand-alone bundle is tough to do. There’s not an apparent aggregator who’s going to profit. Whose greatest curiosity is it to subsidize losses to bundle these items collectively? It’s fairly powerful to determine the economics. The massive guys will not wish to take a reduction. It would take very complicated negotiations.

Mark Lazarus, NBCUniversal Television and Streaming chairman: I believe bundles are undoubtedly sooner or later. It’s form of already headed in that path. What’s not there may be the power to copy the cable bundle person expertise. It’s cumbersome, to must go out and in of each app. It’s buffering. You cannot flip between any two channels, which is instantaneous. It must get to some extent the place the person interface or person expertise enables you to seamlessly enter or exit content material if we’ll stay as much as client expectations.

Starz’s Hirsch: Yes. In 18 to 24 months, you will begin to see a repackaging of the linear enterprise into the digital enterprise. The worth of aggregation is de facto vital. You’ll begin to see extra folks partnering up. Right now, everyone seems to be seen as a channel. Ultimately, the massive people will change into platforms, very similar to Amazon is doing at the moment. The massive guys are going to change into platforms. You’re seeing it now with Showtime as a tile inside Paramount+. Other corporations’ content material will change 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 person conduct by means of Apple TV and our telephones. They make it so goddamn straightforward; their most 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 wonderful. That’s the one streamer that acts like a one-stop store for every little thing I care about. And they may get higher and higher at perfecting that. Plus, you’ll be able to maintain logging into your totally different platforms on there by means of your iPhone. It’s actually sensible. All roads lead by means of Apple.

North Road’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’ve received the telcos (T-Mobile, AT&T and Verizon), and then you definately’ve received the massive digital gamers — Google, Apple and Amazon.

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

Charter’s Winfrey: There are quite a few platforms — Roku, Apple TV and Amazon Fire — which are attempting to mixture streaming content material. But I believe cable has an actual benefit. It’s what Comcast and Charter are placing along with our three way partnership, Xumo. We will take the voice distant from Comcast, the know-how belongings from Sky and Xfinity, the main stay video app in Spectrum TV — you mix all that with the truth that Comcast and Charter 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 prospects who pay for broadband and TV and new gross sales from our totally different gross sales channels — shops, platforms — to place these containers and sensible TV units in prospects’ palms. I believe we’ve got the most effective set of belongings 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 included all of video, audio and gaming content material — and we do not foresee one anytime quickly. That could be the beacon for shoppers of their seek for leisure, within the broadest sense. Absent that, every other aggregation software would have a unique definition for various prospects. For instance, youthful demographics are more and more transferring in direction of short-form content material on TikTook, YouTube and different platforms. Would that be included? The definition of content material we wish to eat and the place we eat it’s all the time altering, significantly in a mature, scarce surroundings.

Entertainment Studios’ Allen: I do not know if there will probably be a major aggregator of this content material, however I do consider the patron may be very sensible and resourceful and can determine the way to get their wants met at a really environment friendly worth. The key right here is to take a look at the world’s greatest streamer, which is YouTube, and the way it’s utterly 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 suppose there’s the potential for extra consolidation of cable networks over time. I believe within the close to time period, we’ll 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 unique 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 can undoubtedly evolve.

Ex-Time Warner boss Bewkes: If you are a community with information and sports activities, these can final. General leisure community subscribers and money circulate will decline. Some may get bought to non-public fairness to reap money circulate within the three or 4 years. It’s not like they will go bankrupt, however they don’t seem to be good for public fairness possession.

Warner Bros. Discovery’s Finch: It’s laborious for me to say as a result of issues appear to alter so rapidly on this business. One of essentially the most priceless issues is a model that stands for one thing. Brands 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. People do not surf the way in which they used to. That’s not likely how persons are wired to look at content material anymore. They make a decision based mostly on how they really feel. So it is true it is more difficult in the event you’re extra of a common leisure community. You want extremely specialised content material. Without it, you’ll be able to’t survive or drive the sort of advert income that we are able to. When you could have a HGTV you could have endemic advertisers. If you are Home Depot or Lowe’s, it’s a must to be on HGTV.

Charter’s Winfrey: The query comes all the way down to what’s the worth of the content material they’re offering? If they’re offering reruns however you’ll be able to’t discover it elsewhere, then it nonetheless gives worth to the shopper. But what you could have at the moment is programmers promoting us content material at more and more increased costs and asking us to distribute that to largely all of our prospects, 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 lots of these providers have a a lot decrease safety threshold than cable, so prospects are in a position to 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. That means throughout the linear video assemble, you will see an growing variety of distributors deciding it now not is smart to hold sure content material, as a result of prospects are already can entry it both free of charge in a pirated trend or simply paying for it at a decrease fee.

NBCUniversal’s Lazarus: I do not suppose it is a one-size-fits-all technique sooner or later. I believe 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 the moment. Even with the erosion of the pay-TV bundle all the way 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 awesome reply since you’re giving up revenue. Even if it is a declining revenue, it is nonetheless revenue. I believe that half will get misplaced a bit within the dialog now. Yes, 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 instances, a whole bunch of tens of millions of {dollars} in revenue. Companies simply do not give that up.

What’s one factor that can change into a TV normal that does not exist at the moment?

North Road’s Chernin: Windowing. That’s the most probably change. Right now, the present financial mannequin is 2 issues: pure vertical integration, the place you produce and personal every little thing, and long-term unique licenses. Neither make sense. You cannot produce sufficient good content material and it is wildly overexpensive. What’s the worth of 5- to 10-year-old reveals? Right now, an enormous sum of money 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 enthusiastic about shopping for outdated reruns from different streaming platforms. It’ll be brand-new programming to a unique 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’ll see streamers begin promoting programming to cable and to 1 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’s sort of unimaginable that this hasn’t occurred but. They have 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 sensible TVs and finally lower Apple out of the complete ecosystem? They’ll simply make a greater TV and crush them. I want I might wager on this.

Ex-Warner Bros. boss Sarnoff: A “metaverse” which provides commerce, gaming, social interplay, sports activities, information and leisure is inevitable, however I believe we’re fairly a methods from that being the first means folks eat media. It will probably be attention-grabbing to look at the metaverse evolve in parallel to streaming and different direct leisure choices. The providing that greatest engages and entertains the patron will win.

Ex-CNN boss Zucker: The capacity to wager and/or gamble when you’re watching sports activities on TV will probably be a lot simpler. You’ll be capable to undergo the TV to position a wager 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 with out borders. Artificial intelligence know-how will make subbing and dubbing of content material easy. AI will can help you watch content material in your house language and not using a third-party dubbing it for you. The world shrinks that means from a content material perspective.

Netflix’s Bajaria: More folks could have entry to unimaginable world tales on demand. The common particular person will achieve entry to extra content material than ever earlier than.

Entertainment Studios’ Allen: I believe we’ll see extra AI built-in into content material, and it is going to be extra intuitive, so when folks watch the content material it’s going to be much more superior in recommending content material for you. I believe AI goes to assist perceive the contact factors in content material and the way to make it higher and extra compelling and interesting.

Charter’s Winfrey: Unified search. You’ll have a discovery and suggestion engine mixed with a voice distant that permits for a seamless expertise for the shopper residing inside a single platform. That will enable a viewer to select and select what content material they need month to month — both stay video or streaming.

LionTree’s Bourkoff: Sports is being unlocked in a giant means. It’s the final main bastion of content material that should be watched stay, which begs a unique method. As house owners of priceless IP, skilled sports activities leagues might more and more go direct, both on their very own or by way of a partnership mannequin, and monetize in different methods — from promoting and sponsorships to commerce and experiences, together with gaming and sports activities betting. We are witnessing early phases 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 is one thing that’s starting to exist now that I’m completely fascinated to see the place it goes. It’s the know-how that permits viewers to decide on the content material they watch as they’re watching. Like the Netflix present “Kaleidoscope.” Handing the editorial decision-making to followers is so seductive. It’s a possibility for a bit of content material to be watched a number of instances. There’s only a few items of content material that is tried this, however the know-how is there, and it is an thrilling new growth in content material creation and consumption. It offers the viewers an interactive method to view these items. It’s simply starting to be utilized and lots of people are experimenting.

NBCUniversal’s Lazarus: Much of TV consumption is being accomplished on the most important, greatest display in your house. It’s all coming by means of your lounge flat-screen TV. What we see, and I believe will change over the following three years, is the quantity of customization persons are in a position to must curate their very own talents and to bundle themselves. How do you order your streaming apps? While it isn’t a seamless person expertise to go between Peacock and Netflix or one thing else, you’ll be able to place them in no matter order you need on the display. The diploma of customization is there. That’s coming to the person streamers, too. We’re engaged on a whole lot of customization for our shoppers. Consumers want to have that interactivity. If you are on a stay sports activities channel, you’ll be able to curate your individual replays after which bounce again to stay. It’s 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.