The New Reality for Entertainment

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It’s a new reality for movie and TV companies. Among the forces at play are Hollywood’s box office struggles, traditional TV’s decline and short-form video’s rise. Then there’s the emergence of artificial intelligence, which is rapidly changing what people watch online. Investors and consumers are reckoning with the shift, too.

For the film industry, expect tougher box office business ahead. It’s been a slog coming back from COVID, with domestic ticket sales rising just 1% or so in 2025. Still, a strong slate of 2026 films all but ensures $9 billion-plus in sales. Potential breakout hits include Avengers: Doomsday, The Super Mario Galaxy Movie, Toy Story 5, Minions 3, The Mandalorian & Grogu, Dune: Part Three and The Odyssey. The total will be well below 2019’s $11.4 billion haul, though.

Tentpoles and remakes/sequels will rule, especially for kids. Recently, even superhero movies have lagged. And adults are going to theaters less, as adult dramas, comedies and other original stories are increasingly available only on streaming services.

Movies are still big business for studios. Disney led with $6.6 billion in global ticket sales in 2025. Warner Bros. was second with $4.4 billion. However, looking at revenue can mask how total ticket sales have fallen as average ticket prices have risen, including for high-priced IMAX and other large-format screens.

Stiff competition is spurring more spending on TV and movie content. Disney’s spending will hit $24 billion in its fiscal 2026, up $1 billion from 2025. Netflix will up its spending by 10%, to $20 billion or so. Paramount says it will spend more. Much of that spending is going to sports rights, international programming and deals for top Hollywood talent. Amid sagging live TV ratings, sports still sees strong viewership, including on streaming. All that spending means more subscription price hikes are in the cards.

Traditional TV is on its last legs as streaming takes over. This summer, streaming was bigger than the combined viewership of broadcast and cable TV for the first time, according to a report by Nielsen. Streaming accounted for 44.8% of total TV viewership in May, while broadcast was 20.1% and cable was 24.1%. Streaming services have surged 71% since 2021. Over that time, the streaming landscape has gotten much more competitive.

Netflix is top dog when it comes to paying subscribers, with 325 million members and a projection to pass $50 billion in revenue in 2026. The company is trying to stoke growth with its $83 billion acquisition of Warner Bros. Discovery, which would give it quality film properties such as Harry Potter, as well as HBO Max’s 130 million subscribers and a vast catalogue of hits. Netflix has reached saturation for United States subscribers and has already turned to ads, so the move would create a streaming juggernaut to stave off rising competition. Paramount is still fighting to buy Warner Bros., saying the process was unfair and its offer is better. Paramount would also buy the linear cable channels, making it a bigger risk.

Meanwhile, Disney faces headwinds in growing Disney Plus, which now has 132 million subscribers. If Disney-owned Hulu is included, total subscribers are close to 200 million. Despite owning Pixar, Marvel, Lucas Films and Fox, Disney’s streaming viewership has stagnated by some metrics.

Disney has also launched ESPN+, a digital version of all that ESPN has to offer for $30 per month. Paramount+ and NBC-owned Peacock are trying to grow, but they will struggle. Streamers are also investing in video podcasts, short-form videos and video games, hoping that alternative entertainment options will lure viewers.

Increasingly, media companies will be chasing YouTube, a serious disruptive force in the industry. Alphabet-owned YouTube makes nearly $40 billion in ad revenue per year and is a leader on mobile devices and on living room TVs. The service makes billions more from its multiple paid video plans. YouTube says its short-form video service, aptly named Shorts, now averages 200 billion daily views, underscoring the explosion of videos that typically range from 15 seconds to one minute on YouTube, TikTok, Facebook and Instagram.

Free online TV platforms are seeing explosive growth, too, such as Tubi (owned by Fox Corp.), Pluto TV (Paramount), the Roku Channel and Xumo TV (a joint venture of Charter and Comcast). The platforms offer hundreds of channels of ad-supported programming, including classic TV shows, news, sports, travel, home improvement and much more. With linear channels and live content, so-called FAST platforms feel more like traditional TV.

Perhaps the most tumultuous trend for the industry is the rapid proliferation of AI-generated videos. Tools such as OpenAI’s Sora and Google’s Veo3 let users churn out endless videos on any topic under the sun. YouTube is embracing AI creator tools, while fighting "AI slop," the term for low-quality and copycat videos. "On average, more than 1M channels used our AI creation tools daily in December," noted YouTube CEO Neal Mohan in a recent 2026 preview. Already, AI videos are getting hundreds of millions of views. YouTube says it clearly labels content created by YouTube’s AI products and creators must disclose use of AI.

Hollywood is grappling with AI and its effect on movies and TV. A prominent example is Disney letting fans use AI to generate videos of its storied characters, a move that comes with lots of risks. The industry will do a lot more AI testing for scriptwriting, special effects and even fully AI-generated movies. The blowback from actors, writers and directors is sure to be intense.

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This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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John Miley is a Senior Associate Editor at The Kiplinger Letter. He mainly covers AI, technology, telecom and education, but will jump on other business topics as needed. In his role, he provides timely forecasts about emerging technologies, business trends and government regulations. He also edits stories for the weekly publication and has written and edited email newsletters.

He holds a BA from Bates College and a master’s degree in magazine journalism from Northwestern University, where he specialized in business reporting. An avid runner and a former decathlete, he has written about fitness and competed in triathlons.