After success of his political drama House of Cards on Netflix, Spacey puts faith in online streaming services.
The actor and director of the Old Vic issued the warning during the MacTaggart lecture at the Edinburgh International Television Festival.
Boxsets are proving popular with on demand online viewing services as viewers want to get involved with shows and cult dramas, such as Breaking Bad, that were not necessarily instant hits.
Spacey said: "[In 1990] the film industry didn’t believe that television could ever become its biggest competitor. I do not think anyone today 15 years later – [in terms of character driven drama] can argue that television has not indeed taken over.
"The warp-speed of technological advancement – the internet, streaming, multi-platforming – happens to have coincided with the recognition of TV as an art form.
"So you have this incredible confluence of a medium coming into its own just as the technology for that medium is drastically shifting. Studios and networks who ignore either shift – whether the increasing sophistication of storytelling, or the constantly shifting sands of technological advancement – will be left behind."
Earlier this year, Spacey produced and starred in House of Cards, a political television drama, that premiered on Netflix. It was the service’s first original drama and all 13 episodes were made available simultaneously, as if it were being instantly released as a DVD box set.
House of Cards showed that television executives should concentrate on producing quality programming that viewers can enjoy however they want, he said.
"If you are watching a film on your television, is it no longer a film because you’re not watching it in the theatre? If you watch a TV show on your iPad is it no longer a TV show? The device and length are irrelevant.
"The labels are useless – except perhaps to agents and managers and lawyers who use these labels to conduct business deals. For kids growing up now there’s no difference watching Avatar on an iPad or watching YouTube on a TV and watching Game of Thrones on their computer. It’s all content. It’s all story."
"If someone can watch an entire season of a TV series in one day, doesn’t that show an incredible attention span? We must observe, adapt and try new things to discover appetites we didn’t know were there."