Nine top drivers shaping the future of fun in media and entertainment

Technology serves as a key enabler. AI, real-time analytics and multisensory design are transforming physical venues into responsive, data-driven environments. As visitor journeys grow increasingly personalized and frictionless, guests are becoming active participants, not passive spectators.

The path forward isn’t without risks. If economic headwinds impact discretionary spending and corporate budgets, experiential entertainment that relies on volume and price premiums may come under strain.

To compete, unlock new revenues and deepen engagement, companies must design modular, multiuse environments that constantly adapt to audience needs. The future will favor companies that focus on creating experience ecosystems.

The content ecosystem is evolving as media leaders recalibrate their streaming focus from rapid expansion to sustainable engagement and profitability. Monetization models are diversifying to reflect new consumer behaviors and economic pressures. Ad-supported direct-to-consumer (DTC) formats are regaining traction as audiences seek affordability and value, and bundling strategies that merge content access, services and platforms are gaining popularity.⁴

Content price, exclusivity and library breadth are becoming increasingly important to consumers. Sports is emerging as a major differentiator in this mix — streamers are shifting programming budgets toward live sports, recognizing its significant influence on subscriber acquisition and retention. Streaming services will account for a fifth of global sports rights spending — approximately US$12.5 billion — in 2025.⁵ To generate a return on investments in sports rights, streaming platforms are utilizing a dual revenue model that includes both subscription fees and advertising, similar to traditional industry practices.

In parallel, content strategies are becoming more dynamic and data-driven. Instead of defaulting to broad global appeal or hyperlocal formats, companies are developing modular IP architectures designed for cross-market flexibility and longevity. For instance, one of the leading streaming players is extending its popular franchises into immersive real-world experiences, such as themed dining, retail and Broadway adaptations, to extend engagement beyond the screen.⁶ Generative AI (GenAI) and automation are reshaping how content is produced, localized and distributed — enabling creators to adapt stories seamlessly to different regions and formats.

Tying all this together is a significant shift in business fundamentals. C-suite executives and strategy heads are no longer simply chasing scale; instead, they are prioritizing operational efficiency, AI-driven content optimization and smart capital deployment. As audience expectations evolve and platform profitability moves to center stage, organizations that rewire their value chains for adaptability will be better positioned to succeed.

The creator economy has matured from a niche subculture into a global economic force, reshaping how media is produced, distributed and monetized. In 2025, creator-driven platforms (such as YouTube and TikTok) will generate more advertising revenue than all traditional media companies combined.⁷ This rise in creator-led influence is forcing legacy media to reconsider their role — no longer sole content originators, but rather as co-creators.

Modern creators operate like media businesses, driven by real-time audience feedback, direct monetization and brand-building across multiple platforms. Subscription platforms, tipping models, merchandise and ad revenue are components of diversified income streams.⁸ What sets creators apart is their ability to build trust and intimacy with their audiences at scale. This results in threats and opportunities for M&E companies. Partnering rather than competing with creators can unlock new engagement layers, content verticals and monetization levers.

Platforms are evolving from distribution tools to economic engines, offering creators embedded commerce, audience analytics and GenAI tools that streamline production and amplify reach. As the use of AI increases, questions around IP ownership and algorithmic bias come into sharper focus. The challenge lies in ensuring transparency and ethical use.

Media incumbents must pivot their focus from audience acquisition to creator acquisition. This means developing creator-friendly contracts, transparent revenue-sharing models and platform features that support long-tail content. Successful partnerships will prioritize co-creation, data access and flexible IP terms — balancing control with creative freedom.

The creator economy is not just a content trend; it’s a structural transformation. To stay relevant, M&E firms must reimagine the producer-audience binary and embrace a new paradigm: Creators are not just part of the ecosystem; they are the ecosystem.

AI is transforming content production by streamlining processes and opening new creative opportunities. As tasks like editing and asset management become more efficient through automation, companies are seeing early returns on AI investments — prompting them to invest even more.⁹ However, the speed at which AI can operate depends on the reliability of the technology infrastructure and quality of data inputs. Unfortunately, many legacy systems struggle to support these essential characteristics.

Diversified media companies are taking steps to disaggregate their portfolios, separating mature linear networks from their higher-growth streaming and studio businesses.¹¹ The strategy of breaking companies into segments appears to challenge the pursuit of scale. After all, the rationale for many deals during the last wave of media M&A included bulking up content libraries, expanding studio capabilities, extending reach and realizing efficiencies. By increasing operational and financial scale through mergers, M&E companies enabled the enormous investment required to launch DTC platforms. Now, the industry’s long-standing profit model is changing. Executives and investors are reevaluating the ideal business mix, questioning the long-term viability of maintaining strategies that combine linear and streaming.

Looking ahead, linear network owners are likely to pursue M&A to achieve cost synergies and strengthen competitive positioning. The initial step will likely involve separation of networks from their parent companies — mainly through spin-offs. Private equity, comfortable with disrupted industries that continue to generate cash, could play a facilitative role. Once independent, the spun-off entities could merge with similar network owners, aligning future strategies with business and financial realities. A comparable trajectory may unfold in the streaming sector, where a few leading players will have more flexibility to engage in DTC M&A to rationalize the industry, accelerating the path to sustainable streaming profit growth.

In essence, the M&E industry is marching down the path of descaling its diversified portfolios to prepare for future consolidation in linear and streaming.

The sports industry is entering a new growth phase, shaped by dual forces: the professionalization of traditional sports through institutional capital and the rise of non-core sports driven by changing fan preferences. Sports is an increasingly attractive asset class. No longer content with passive ownership, private equity and institutional investors are deploying capital across the value chain, from athlete development and technology platforms to infrastructure and media rights.

This shift — that was once centered on elite franchises and leagues — is now fueling multi-club ecosystems that boost synergies, scale engagement and expand monetization. Women’s leagues, such as the National Women's Soccer League (NWSL) and The Women's National Basketball Association (WNBA), are gaining investor interest yet still receive a limited share of media and sponsorship — presenting a clear arbitrage opportunity for investors.

Nontraditional and second-tier sports are also gaining traction. Gen Z and millennial audiences are gravitating toward emerging formats, such as lacrosse, drone racing, women’s ice hockey, padel and pickleball.¹² Many of these are lifestyle-driven and not all are economically viable, but they represent a directional shift in fan behavior.

Sports like these offer attractive entry points for small investors. Lower asset valuations, fragmented market structures and flexible operating models create fertile ground for platform building. By applying operational rigor — such as professionalizing teams, consolidating commercial functions and enhancing digital fan engagement — investors can transform these niche assets into scalable businesses.

Tying all these threads together is technology. Real-time data, augmented reality and interactive platforms are blurring the line between spectator and participant, enabling teams, leagues and sponsors to foster deeper relationships with fans.

Ongoing disruption to the traditional ad agency model is reshaping the industry — not only creatively, but also structurally. Legacy agency hierarchies and linear processes are giving way to agile, modular models designed for flexibility and speed.

From auto-generating tailored TV ads to accelerating campaign production cycles, AI-powered platforms are removing long-standing cost and time constraints while demanding a rethink of resourcing, talent strategy and operating rhythm. Global technology giants are rapidly advancing full-stack AI ad tools that automate everything from creative development to media buying, reshaping the ad value chain and putting pressure on legacy agency models built on manual workflows and billable hours.¹³

Ad agencies are also increasingly evolving into data-driven ecosystems, investing in advanced analytics and precision AdTech to target audiences more accurately at scale. As this happens, they’re shifting focus from reach to relevance — and from impressions to impact.

Powered by digital, emerging ad formats mean multiple new consumer touchpoints are being created. Retail media networks — projected to grow 24% annually during 2025–26 — are driven by their command of first-party data, while short-form and interactive videos dominate mobile engagement.¹⁴ Social platforms are accelerating this shift by experimenting with AI-powered, fully automated ad creation and targeting, enabling businesses to generate entire campaigns based on a product image and budget input.

Beyond the adoption of AI tools, agency CFOs and finance heads must reimagine P&L models, pursue outcome-linked pricing and establish fluid partner ecosystems that facilitate co-creation with platforms, startups and creators. In such a fragmented, high-expectation media environment, agencies that embrace this evolution will redefine themselves — from service providers to true growth partners.

The video game industry faced a 2% workforce reduction in 2024 due to layoffs and studio closures as companies strive to balance innovation with profitability.¹⁵ This has been especially challenging in a post-pandemic environment affected by supply chain disruptions, tariff headwinds and escalating development costs.

These higher costs — combined with reduced user acquisition opportunities and higher price points — are squeezing consumers across formats. While core and premium titles may sustain demand, mid-core and casual games are more vulnerable to pricing friction. Despite these pressures, the industry continues to build anticipation through next-generation hardware cycles, evolving monetization models and flagship content pipelines.¹⁶ While these can’t guarantee long-term momentum, they’re expected to drive near-term spikes in engagement and revenue.

Technology is continually reshaping the player experience. Enhanced physics engines and photorealistic graphics are pushing the boundaries of immersion, while AI is enabling real-time personalization and dynamic storytelling. Instead of being static experiences, games have evolved into interactive narratives where players co-create outcomes.

The challenge for developers is to strike a balance between infinite content and cognitive overload, with experiences tailored to demographic and play styles to keep engagement high without exhausting users.

Cloud gaming — propelled by a 44% CAGR during 2025–30 — holds potential to drive market expansion by eliminating traditional hardware constraints.¹⁷ However, while infrastructure has improved, a broader breakthrough is being held back by latency issues, cost constraints, and limited mainstream adoption. For now, it remains more of a strategic value-add than a stand-alone growth engine.

The shift toward subscription-based models raises the stakes for determining content value: Consistent updates, cross-platform flexibility and expansive libraries are all becoming must-haves. As these developments accelerate, we’ll likely see more consolidation and strategic partnerships, with platforms competing to deliver all-in-one bundles.

Community is the beating heart of modern gaming. Players aren’t just consumers; they’re creators, influencers and contributors to in-game economies and narratives. Companies that foster community ownership, uphold ethical monetization and design with the player at the center won’t just increase loyalty — they’ll shape the future of gaming into an inclusive, highly personalized entertainment platform that fosters sustained engagement.

Accelerating legalization efforts and an increasingly digitized fan experience are driving rapid change in the global gambling industry, with online gambling alone projected to reach US$154 billion by 2030.¹⁸ As digital adoption continues to deepen, sports betting is emerging as a key catalyst for growth in this broader transformation.

Legacy models won’t suffice; operators’ success now depends on their ability to navigate evolving regulations, integrate digital experiences, and build lasting consumer trust. With markets like Japan and Thailand moving toward legalization and more US states re-evaluating online gambling laws, regulatory momentum is accelerating, but so is scrutiny.¹⁹ To scale sustainably across jurisdictions, operators must treat compliance agility as a core strategic capability, embedding it into their business models from the ground up.

Digital integration is redefining fan engagement. Betting platforms are merging with live sports environments through in-venue wagering zones, mobile apps and interactive second-screen experiences.²⁰

Broadcasts are now also serving as transactional channels, featuring live odds and overlays that turn passive viewers into active participants. Companies that seamlessly embed betting into the broader entertainment fabric will unlock new monetization pathways.

Land-based casinos aren’t standing still. With growing competition from online alternatives, they’re transforming into digitally enabled entertainment hubs, offering gamified loyalty programs, immersive augmented reality (AR) and virtual reality (VR) features and mobile-first personalization.²¹

Growth across the industry brings the need for greater responsibility. Public scrutiny is intensifying around ethical gambling practices, financial literacy and the social impact of ubiquitous betting. We’re seeing divergent approaches to taxation, with some jurisdictions using it to foster market expansion, while others impose barriers through heavy levies.

For sustainable growth, operators need to champion responsible gambling and empower tax and legal leaders to drive taxation strategy as a key business variable. They also need to collaborate with regulators to build trusted, long-term ecosystems.

Key considerations for M&E companies to thrive in this multidimensional future:

• Deliver emotionally resonant, lifestyle-oriented entertainment experiences that transform passive audiences into active participants, and build diverse, monetizable pathways through personalized engagement and real-time interaction, with technology serving as an enabler.
• Redefine content creation through strategic collaboration, partnering with creators and transforming platforms into dynamic economic engines with embedded commerce, analytics and AI capabilities.
• Establish an enterprise-wide AI strategy, supported by integrated technology stacks, strong governance and a clear roadmap for monetizing proprietary data, ensuring transparency, ethical use and long-term competitive advantage.
• Prioritize operational agility and smart capital deployment, embracing innovative business models and reconfigurable portfolios to stay ahead of changing audience behaviors and evolving platform economics.