2023 media & entertainment
industry outlook2023 media & entertainment industry outlook
Contents
Streaming video services seek profitability amid more competition4
Social media is looking more like 21st century TV 5
Creators outgrow the social feed and go direct-to-consumer6
Gen Zs are defining the future of media and entertainment 7
Brands focus on harnessing the power of fandom and communities 8
Signposts for the future 9
About Deloitte’s outlooks
Deloitte’s 2023 media & entertainment industry outlook seeks to identify the strategic issues that media & entertainment organizations
should consider in the coming year, including their impacts, key actions to take, and critical questions to ask. The goal is to equip US media &
entertainment organizations with the information needed to position themselves for a robust, resilient future.
22023 media & entertainment industry outlook
Executive summary
In 2023, indications show that change in This year’s outlook doesn’t have its own chapter on video games.
Instead, gaming is represented throughout. In 2023, the story of
the media and entertainment business is gaming is that it has an impact on every part of the media and
entertainment industry. All entertainment strategies should consider
likely to continue.video games, from simple mobile games to massive multiplayer
services and rich, hyper-realistic narrative game worlds. Gaming
Studios and video streamers face the reality of their own market may also highlight the tight communities and fandoms that can
disruption, trying to find profits in a less profitable business. They help sustain and amplify entertainment franchises. In 2023, it may
compete with not only each other for attention, time, and revenues, become clear that video, social, messaging, and interactive are all
but also with social media, user-generated content, and video games. part of the same ecosystem of engagement.
The latter have evolved more quickly, staying close to younger
demographics.
While streaming video-on-demand services spend billions on
content to tempt fickle subscribers, social media services have
more free video content than they can manage. Indeed, top social
media services are leaning into user-generated video content (UGC),
emphasizing users’ interests more than their connections—and
looking more like a new kind of personalized TV. While the creator
economy has supported social media and brought independent
creators closer to their audiences, creator incomes are still lean
and unreliable. Leading UGC services seem unsure how best to
support their content creators and brand ambassadors while
keeping their own costs down. At the same time, more socializing
may be shifting into messaging services that lean into utility more
than entertainment.
32023 media & entertainment industry outlook
Streaming video services seek
profitability amid more competition
It’s been 15 years since the streaming video revolution began, While competition among streamers is expected to continue, likely
and we can now see the impact of its disruption. In 2022, SVOD amplified by more acquisitions to consolidate their positions, such
services in the United States—the most mature market for SVOD— internecine struggles should not overlook the broader changes
finally surpassed cable and broadcast TV.1 Leading US providers shaping media and entertainment. More people across generations
have established global footprints, and media companies in more are likely giving some of their entertainment time to UGC and
countries have launched their own domestic SVOD offerings. As a interactive video gaming.
delivery technology, on-demand streaming has radically disrupted
video consumption, upending the entire entertainment industry. Instead of betting billions on content, UGC-based services focus on
data technologies that target users with streams of personalized
Streaming has also disrupted profitability. Gone are the revenues content and advertising in shoppable interfaces. Such services are
enjoyed during the cable TV era, which formerly approached those no additional cost to users, and the content is almost free to the
of the global energy sector; by some estimates, streaming generates services. Gaming can soak up idle time with mobile games, offers
one-sixth as much revenue per home as pay TV.2 Audiences aresophisticated narrative and social multiplayer experiences, and
fragmented, cancelling subscriptions is easy, and advertising has yet directly monetizes content expansions and digital goods. Both UGC
to unlock revenues. Content has only become more expensive toservices and gaming are competing more directly with streaming
acquire and produce. video, but each offers them opportunities as well.
Operational costs are high, and competition for subscribers is fierce. More SVOD companies are expected to expand their portfolios into
Amid declining economic conditions and expected high subscription gaming, either through IP deals or acquisitions. They will likely also
cancellations, most US streamers now offer cheaper, ad-supported work to better leverage social media and content creators without
tiers. Some are launching yearlong contracts at discounted rates.3 having to become social networks and UGC providers themselves.
So-called FAST services—free ad-supported television—provideThey may never regain the historic revenues of cable’s prime years
live and on-demand programming with a more lean-back, (before the great streaming disruption), but the path forward will
ad-heavy approach.likely reveal new innovations, business models, and opportunities.
These pathways lower the price of subscriptions and can make
profitability harder. Providers are testing how much people will
spend for content with, say, six minutes of ads per hour versus Strategic questions to consider:
a premium, ad-free subscription. Many are raising the prices of
premium offerings, exploring whether “business class” can subsidize o What is the right balance of pricing,
the economy seats.4 The year ahead may see more experiments with advertising, and spend on content
content windowing, with cheaper subscriptions having to wait 15 orand marketing? How does this balance
differ for top-tier services versus
30 days to see top new releases.
second-tier and niche providers?
Streamers are also working to re-create more of the lucrative cable o What is the best path for a given
streaming video company to grow
TV advertising model in their streaming services.5 If more advertisers
its portfolios, within the video market
get on board, ad revenues could offset subscription pricing and but also with gaming and UGC?
content spend. Successful advertising requires more data and better
o What is the distinct value of streaming
ad tech to get the right ads in front of the right eyes. With so many
video within the broader landscape
new, ad-supported streaming offerings hitting the market, 2023 mayof media and entertainment? How
see considerable movement and innovation in streaming advertising.can streamers reinforce this value,
A renewed focus on live entertainment could further aggregateespecially to younger generations,
audiences around key events. Still, streamers will likely be pressured who may be more engaged with UGC
and gaming?
to put their data assets to work, build out the ad platforms needed
to deliver ads more effectively, and provide advertisers with better
metrics on actual viewership. The industry may focus less on
subscriber count and more on viewership per household.
42023 media & entertainment industry outlook
Social media is looking more like
21st century TV
Streaming video may have disrupted an entire industry, but social firehose of content and c