Who wins, who loses in Netflix/Warner Bros. Discovery deal?
Who wins, who loses in Netflix/Warner Bros. Discovery deal?
Is the agreement good or bad for customers? What about Hollywood? We’ll give you our thoughts here.
The whirlwind sweepstakes for Warner Bros. Discovery has ended with a winner. After multiple rounds of bids and careful consideration, David Zaslav and the WBD board have selected Netflix to purchase its TV and movie studios, as well as HBO Max and other streaming assets in a deal worth nearly $83 billion.
The deal has the power to completely reshape Hollywood, considering the size of the two entities now joining into one. There are plenty of hurdles for the deal to clear before it’s done, but setting aside regulatory questions, we wanted to discuss whether or not Netflix’s purchase of WBD is a good thing for viewers who are already watching streaming prices rise seemingly without end, and just want to find something good to watch without having to hunt around hard to find it.
Let’s start at the consumer level. Is Netflix buying WBD a good thing? The streamer certainly wants to give that impression, saying in the press release that because of the deal, members “will have even more high-quality titles from which to choose. This also allows Netflix to optimize its plans for consumers, enhancing viewing options and expanding access to content.”
To be sure, the deal will expand the Netflix library by quite a bit, or package the two services for a bundled price at a reduced cost for viewers if they remain separate. But that’s all on Netflix; the simple truth of the merger is that the popularity of the content it’s getting from HBO gives it the power to do essentially whatever it wants from a pricing standpoint. Customers would likely pay a premium for all the combined content of HBO and Netflix on a single app, and in an environment where streaming prices are spiraling ever upward, a cynical observer could be forgiven for thinking that Netflix would ratchet its price sky-high once it has control of the HBO Max library and other Warner Bros. titles.
While this may sound naive, I think Netflix may actually show some restraint in that regard — at least for a while. The regulation of streaming services has not kept pace with laws that govern traditional TV, radio, and other forms of communication, and sooner or later, the government will catch up. The dominant position Netflix already occupies in the streaming world means that it has to take a certain amount of care in how it treats customers if it wants to be allowed to maintain its place at the top of the heap without deeper scrutiny.
But more than that, Netflix has a history of being deliberate with pricing changes in general. While other big streamers like Disney+, Hulu, and HBO Max itself have set the cost of ad-supported streaming at $10 per month or more, Netflix still charges just $8 for its Standard with Ads package. The Streamable’s own tests showed that Netflix has the best ad experience of any streamer, and the price of the plan has only risen by $1 since it first launched. That doesn’t mean that Netflix prices are set in stone forever, but even if they do go up after the deal with WBD closes, I don’t think the streamer will try to gouge its customers.
The effect of the deal between WBD and Netflix on Hollywood in general is going to be harder to discern. Certainly, things are about to get harder for Apple, Disney, NBCUniversal, Paramount, and the other companies that are trying to make streaming profitable, and it may touch off a wave of consolidation that many industry analysts have seen coming for a while. Smaller outlets like AMC and STARZ may start to get snatched up as the larger companies try to do their best to embellish their content libraries as best they can to continue competing.
I don’t think the purchase of WBD’s streaming assets by Netflix will upset the overall vision that media CEOs have been spelling out for quite some time now: a Hollywood that has three or four major streaming services that each price out at less than the cable bundle of old. Customers will still be able to pick and choose from these streamers, but the complaints about streaming turning into a new version of cable are likely to continue under the new world order.
Theater chains around the United States are certainly looking at the deal with trepidation, to say the least. Netflix’s overall philosophy on releasing its original films has been made clear over and over: Netflix movies are meant to be streamed on Netflix. The streamer does put movies in theaters from time to time, but usually only for a minimum required period to get that movie awards consideration. But in its announcement of the deal with WBD, Netflix said it was committed to building on the strengths of WBD’s current operations, including theatrical releases for films.
The promise is better than the alternative in the eyes of theater chains, but most have run afoul of Netflix before, and they know how the streamer operates. They’ll likely need to see action instead of simple words from the world’s largest streamer, not just in terms of the number of movies released to cinemas, but the quality of those movies and the duration they are allowed to stay in theaters before switching to streaming.
All in all, I’m cautiously optimistic about the acquisition of WBD’s assets by Netflix for now. To be sure, there is a danger of Netflix becoming too big to compete with and too big to restrain from treating customers poorly as a result. But the company’s history to date and its seeming commitment to helping preserve WBD’s place as an important piece of the Hollywood machine lead me to hope that the worst won’t come as a result of the deal.
Netflix
Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”