Exponential advances in technology have changed entire industries, especially over the past 10 to 15 years. For example, Netflix, Amazon Prime, Hulu, and digital channels are massive disruptive forces within the media and television industries.

Further, given the rapid pace of technological change, the landscape will continue to evolve and look completely different a decade from now. This article contains three trends that are likely to develop over the next ten years in the entertainment industry.

Key Takeaways

  • The television industry has seen exponential changes over the past ten years and the disruption is likely to continue over the next ten years.
  • Cable TV companies might have no choice but to unbundle packages as they face growing competition from Netflix, Hulu, and Amazon Prime.
  • Traditional advertising models become antiquated when media companies shift to subscription-based models.
  • Smart TVs and virtual reality are changing the way consumers interact with content.

1. Freedom to Choose

The cable TV industry has traditionally featured a lineup of popular channels that customers purchase as packages. The bundling of channels gives consumers the option to buy a combined package, which theoretically costs less than buying each channel separately.

However, cable TV is facing growing competition. With services such as YouTube, HBO, Hulu, Netflix, Apple TV, and Amazon Prime producing and offering premium shows, the interest in traditional cable television has declined.

Streaming Providers

The trend in the entertainment industry is to provide consumers with more choices: Whether to watch live TV, last night's favorite TV episode, or binge-watch a full season of a past or present show. The influx of streaming services is shaking up the entertainment and cable industry, bringing consumers a greater variety of entertainment, including on-demand, TV shows, movies, and original content.

Netflix is the leader in streaming services, which offers zero commercials for a monthly fee. Hulu also offers streaming services, including movies, live TV such sporting events, and TV shows. With a Hulu membership, customers can watch their favorite network shows that aired on the network channels of ABC, NBC, and CBS one day after the show has aired.

Hulu also offers add-ons, including movie channels like HBO and ESPN for sports lovers. Similar to Netflix, Hulu also has multiple package packages, which range from a cheaper plan that contains some advertisements to plans that are ad-free.

The Great Unbundling

The great unbundling allows people to consume entertainment content on their terms and pay for only the channels they want. This freedom of choice will likely create competitive pressures on the traditional TV providers. It's likely the cable channels will continue to unbundle their services to remain competitive.

However, the future will undoubtedly include the merging of entertainment providers. For example, the previously-mentioned Hulu is owned by Disney, which also owns the ABC network, ESPN, Pixar, and Marvel Entertainment. As a result of many timely acquisitions, Disney can provide a wide range of entertainment choices for their customers.

In other words, while the unbundling from cable providers to streaming services continues, there's also a re-bundling trend within the streaming industry through mergers and acquisitions. However, the freedom-of-choice trend will likely continue, regardless of the media company ownership, putting pressure on traditional television providers to reconsider the way they offer their services.

Cord Cutting

In 2020, the cable and pay-TV industry lost six million U.S. households who cut the cord with their cable providers, bringing the total cord-cutting households to 31 million. It's forecasted the cord-cutting trend will continue to grow, reaching more than 46 million people.

However, more than 77 million households still have cable or satellite TV, but the number declined 7% in 2020 versus 2019. It's important to note that some of the increase in cord-cutting in 2020 was due to the lockdowns during the coronavirus pandemic in which many people stayed at home to avoid catching the virus. Despite the skewed numbers of new streaming customers in 2020, the cord-cutting numbers will likely increase in the future.

2. Commercials Become Antiquated

Streaming-service providers are proving that it's possible to create and grow successful enterprises around a business model that includes little or no revenue from commercials. The trend is now changing to one based on a subscription model rather than on ad revenue alone. In ten years, even traditional cable providers are likely to become subscription services, allowing unbundling and a tiered fee structure based on the type and number of channels a consumer chooses.

Further, a hybrid model may be available ten years from now in which a subscription service is combined with smart advertising. In this scenario, rather than having three-minute commercial spots during a 30-minute television program, TV programming may change to one where a consumer must have a monthly subscription and then view targeted banner ads. This type of advertising already occurs on the Internet, and the amount of data television companies collect allows them to do much the same.

Advertisers are also likely to look to boost engagement from their ads. For example, TV advertisers have turned to second-screen advertising, which drives viewers to their mobile devices—or second screens—to engage with the company's website during the live program. For example, an ad might run during a live-TV event, encouraging viewers to sign up for a promotion or sale via the company's website, using their mobile device.

3. More Interactivity

Companies such as Facebook, Google, and Microsoft have all developed virtual reality technologies. Within the next ten years, traditional television screens are likely to make way, at least in part, for variations that pair with VR eye-wear and headsets. Evidence of this is already available in Google's development of Google Glass as well as Samsung's foray into wearable accessories that help turn phones into virtual reality machines.

What's more, all televisions are likely to become smart TVs within the next ten years. Expect these devices—which allow users to stream videos and music, browse the Internet, and view photos—to be ubiquitous in homes across the world, adding to the power and potential of virtual reality and future programming.

There is a race among technology giants to be the leader in smart TV development, including companies inside and outside the industry. Businesses such as Google, Apple, Netflix, and Amazon are all developing more powerful smart TVs, and the trend is likely to make the technology much more affordable for consumers.