The future of TV: lots of choice, lots of hassle

THIS year, there have been two media deals bold enough to transform the strategic and financial footprint of the companies involved.

The market hates both.

Lack of enthusiasm for Paramount Skydance’s US$111 billion February purchase of Warner Bros Discovery is evident in a share price that remains at half the 2025 highs, and eight “sell” ratings from Wall Street against just two “buys”.

In June, Fox Corporation’s shares fell by 25 per cent after its US$22 billion acquisition of the streaming TV platform Roku.

These bad reviews are not, or not only, indictments of the logic of the deals. They also reflect the long, grinding transformation of the TV industry. This is still far from complete, even as another wave of change is set to roll over the industry.

To mix metaphors: Cable TV in the US used to be a goose that laid golden eggs, and now it is a shrinking pie.

Consumers once paid a fat monthly fee for a package of dozens of linear channels. The gold came from forcing customers to pay for channels they hardly watched.

If they wanted the best content – sports on ESPN, movies on HBO, news on Fox – they had to buy a “long tail” of obscure networks.

Advertising was sold against the whole bundle, too. It was a high-margin, stable business. The studios and distributors cashed in, and the customers took what they were given.

Netflix’s streaming service offered something better: all-you-can-eat entertainment on demand, from a wide menu and at a low (if now rising) price.

Decline in traditional TV

In response, customers have been dumping the old model.

Today, 62 million US households have a traditional pay TV subscription – 3.5 million fewer than the year before, and 36 million fewer than a decade ago, said research institute MoffetNathanson Research.

The old studio companies and distributors have experimented with various new models, and have settled on running their dwindling linear businesses for cash while investing in their own on-demand streaming services – HBO Max, Paramount+, Disney+ and so on.

But the pie is shrinking. A streaming subscriber generates less revenue and profit than a cable subscriber. And, tech companies such as Apple and Amazon like the business of making and streaming content, too.

The competition means prices will stay low. The industry will never again be as profitable as it was.

For viewers, this is something to celebrate. Cable TV was a bad deal. Netflix took a chunk of oligopoly profits and handed it back to consumers.

For the industry, though, it has forced hard choices. Streaming original content is only sustainably profitable at scale. Paramount+ did not have it, so combining it with HBO Max by buying Warner Discovery, became a necessity for Paramount Skydance. This drove them to overpay.

Even Fox, whose mix of sports and news has proved the stickiest of the old distribution models, struggled with the perception that it lacked a bridge to the post-cable world.

So it paid above the odds for Roku, giving it a popular TV operating system that connects households to various streaming platforms, and a free ad-based streaming service to combine with its own.

Eventually, the industry will reach a new, stable equilibrium at a lower profit level, perhaps with fewer players. The question is whether this equilibrium will serve customers optimally. The current state of affairs does not.

The mishmash of platforms operated by content creators, telecommunication companies and tech groups has left viewers with a fractured, confusing and annoying user experience.

Multiple remote controls. An Apple TV in the living room, a Roku TV in the basement and a third set-up on laptops and mobiles. Switching between multiple subscriptions in search of shows. Sports fans have it the worst, chasing their teams from one place to another.

Yes, some digital distribution platforms (Apple, Charter, Amazon) bundle together assorted linear channels and streaming options for a single price.

But, customers still have to switch around, and producers of the highest-quality content have an incentive to keep it on their own platforms, ensuring that the industry remains a jumble.

It is almost enough to make a person miss the ABC-NBC-CBS oligopoly – a world of less choice, but a pleasure to use by comparison.

Meanwhile, the viewing habits of young people, fostered by social media, are letting a new set of competitors in by the side door.

YouTube now has the second-largest share of total TV viewership, a hair behind the combined Paramount and Warner, said MoffetNathanson.

Short video, in the style of TikTok, has given rise to micro dramas, shows with episodes a minute or two long aimed at habitual scrollers. They are already a big business in China.

As Laurent Yoon of Bernstein Private Wealth Management argued, similar formats will allow social media platforms to steal eyeballs from the streamers.

Add rapidly improving artificial intelligence production to the mix, and there is a formula for even more choices – spread across an even more fractured industry landscape.

Might the industry come together to solve this problem? Or some digital Switzerland develop a neutral super-platform that cuts out the complexity?

It is hard to imagine this happening, when almost all the competitors are struggling with their own restructurings, and the social media companies are bent on further disruption.

The future of TV will be interesting, diverse – and even more annoying to use. FINANCIAL TIMES