The holiday season is getting close and many of us are slowly winding down to spend some well deserved time with family and friends. This means that it’s also time to reflect on what’s happened over the past twelve months and look ahead to what we have in store for 2026.

But, before we jump into my predictions, I have to confess that my projection at the end of last year missed the mark somewhat, or at least the timing was wrong. One of the underlying predictions I made was that we would see a return to material growth for advertising revenues. And, while we’ve certainly witnessed continued growth for advertising on streaming services, I had assumed that the overall market for advertising as a whole would start to increase again. 

However, the reality is that advertising on traditional TV is declining faster than the growth we’re seeing on streaming services. This is putting immense pressure on the traditional ad-funded broadcasters to rapidly evolve. In hindsight, I overestimated the macroeconomic turnaround; growth at the moment is not driven by consumer demand, but rather by huge investments in things like data centers as a result of the AI boom. If anything, consumer demand has softened due to a weaker economic outlook which is impacting disposable incomes and job markets. For 2026, I’m revising my view of a significant pickup in consumer demand, and believe that recovery will instead be quite tepid.

With that baseline about the macroeconomic trends settled, I’d like to move onto what I think 2026 will have in store.  

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Test of Tier 1 SVOD pricing power

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It’s clear that Netflix is one of the most successful business stories of the 21st century, coming from almost nothing to become the world’s most valuable media company with a market cap of about $500B. It’s easy to forget that it’s only 15 years since Netflix embarked on a strategy which was widely derided at the time, namely producing its own exclusive content and distributing it to global audiences. Back then, TV was largely dominated by local content, and I don’t think any industry experts expected the initiative to be as successful as it has been.

Since then, a number of large media companies have emulated the “Netflix strategy”, aiming to go big, go global and have one SVOD service which is packed with so much value that it’s impossible not to be a subscriber, with gradual price increases motivated by “increasing content costs” to improve profitability.

Most media offerings, be it print media or online media, have historically been targeted, reaching a specific demographic or special interest. While there have been generic services, they tend to be comparably few, and many have struggled with the fragmentation of consumer’s interest.

As a result of this increased competition between generic SVOD services, I believe it will become increasingly harder for services to raise prices without losing subscribers. This reduced pricing power for subscriptions will drive innovation in new business models as services look to retain the right customers.

This of course implies that we will have approximately the same amount of generic Tier 1 SVOD services on the market. There are numerous rumours of potential mergers between large services, which will reduce the competition and open up new avenues of revenue generation. Saying that, it’s a dual edged sword since a full combination of two SVOD services will not lead to double the price for each subscription so such mergers are likely not 100% accretive. I believe we’ll see some exciting business transactions in 2026 but the market impact for the merging services is not certain to be positive.

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The rise of Agentic AI in video services

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Agentic AI is currently attracting a lot of interest at industry level, yet from a consumer perspective, it’s generative AI that still gets the most attention. Gen AI will certainly play a role in video production going forward because it should be possible for innovative producers and directors to leverage the technology to produce high quality content at lower budgets. The level of innovation will be high, but we’ll likely see protests from both script writers and actors who will be squeezed in the market going forward.

However, I’m personally more excited about agentic AI, i.e. giving AI agents specific tasks to execute. From a consumer perspective, such agents can be relatively basic, for example, offering you advice on your video consumption or curating a video experience for you or your family. Plenty of innovation is going into this area, which I believe will be an additional driver for improved consumer experience and likely a loyalty driver for certain parts of the market. From a business perspective, I’m extremely excited about the prospects of agentic AI. Operating a video service normally requires quite a lot of staff. Even if the amount of people involved is considerably less today than it was in broadcast TV 30-40 years ago, you still need people involved in all parts of the workflow of a modern video service just as you did in broadcast a few decades ago. 

I believe that we’ll see a gradual, but rapid, evolution as video services replace parts of their operations with AI agents. This will start with more basic, mundane tasks but will then move to more advanced operations. The human staff required to operate a video service should be possible to reduce with up to 50% in the next few years enabling  resources to be spent in other areas.

Accedo Compose, our Agentic AI solution, is a platform which allows for such a step-based approach to operating more efficiently. An advanced guard rails system gives administrators the possibility of defining the exact use cases when Compose will raise any issues to a human for decisions and when it’s allowed to carry out decisions on its own. 

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Live sports as an SVOD driver

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A year ago, I assumed we would see a reduction in large SVOD services bidding for sports rights, since this is a very expensive way to drive subscriber growth. It also tends to attract notoriously disloyal consumers who don’t hesitate to quickly move on to the next owner of their favorite sport.

However, it seems like the market still rewards revenue growth for video providers more than profitability, because we continue to see many companies participating in bids for sports rights. Personally, I cannot rationalize this in any other way than for relatively new entrants in a market: there is a huge marketing value with sports, which creates brand awareness valuable enough for a service to justify its spending on sports. Simply put, sports rights puts an “aura” on a VOD service which places them much higher on all consumers’ minds and not only for disloyal sports fans.

Following that line of thought, you can of course argue that once a certain video service has reached a high enough consumer brand awareness, there are limited reasons to spend money on sports - unless, of course, you can calculate the ROI of such an investment, including the long term subscriber increase and the gross profit addition for the long term subscriber growth. My view remains that the current value of sports rights is not justified by any normal ROI and we will see a return to normality over the next 12-24 months.

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To conclude, we’re seeing the dawn of the agentic AI era for video services at the same time as the large Tier 1 generic VOD companies have raised prices significantly. The possibility of entering the video market with an attractive, cost efficient service targeting a certain part of the market is better than ever. I believe that while we’re seeing consolidation among the larger video services, we’ll also witness continued fragmentation and a healthy opportunity for those smaller providers, who will be able to offer content to consumers at a considerably cheaper price than the large services.