In the battle for attention against TikTok, Netflix's measure of success is shifting. A user opening Netflix to play a movie in the background while scrolling their phone is a victory, as it prevents them from opening a competitor's app. The primary goal is capturing the initial user action.
Netflix isn't buying Warner Bros. out of desire, but necessity. Facing plateauing engagement and competition from free platforms like YouTube, acquiring a massive IP library is a mandatory move to boost retention and hours watched, even if it's financially risky.
Paramount chief David Ellison's plan for a combined company mirrors the exact strategy that just failed for current Warner Bros. boss David Zaslav: fund high-end IP with a massive library of reality TV. The only new variable is the financial backing of Ellison's billionaire father.
The debate over theatrical windows isn't just about ticket sales. Movies released in theaters become more memorable cultural events, largely due to the accompanying marketing push. This translates directly into higher engagement and viewership when those same films later arrive on streaming services.
Hollywood has flipped its view on Netflix. Initially seen as a hostile disruptor, the streamer is now perceived as the industry's "best bet." This shift is driven by the greater existential threats posed by YouTube's dominance of TV viewership and generative AI's potential to devalue creative work.
Unlike ad-funded broadcast TV, streaming services rely on subscriber acquisition. This model makes long-running shows like 'ER' economically inefficient. After a few seasons, a show's ability to attract new users drops, making it cheaper for the platform to cancel it and launch a new series.
It's financially illogical for Oracle billionaire Larry Ellison to trade high-growth AI stock for a decaying media asset. The likely motive isn't a passion for movies but a long-term data play. The goal would be to collect vast amounts of viewer data for other business purposes, similar to big tech platforms.
Netflix once aimed to create an HBO-level original library. This acquisition is a tacit admission of failure. The streaming giant couldn't build its own deep, enduring library because its economic model prioritizes short-term user acquisition over creating long-running, culturally resonant shows.
The media industry is strategically torn. Netflix's pursuit of both the premium Warner Bros. library and cheap podcasts shows it's hedging its bets. It's unclear if the winning model is a high-cost service that stands out from AI-generated "slop," or a low-cost, high-volume model to compete with user-generated platforms.