Key Takeaways:
- The contest between Netflix and Paramount for Warner Bros. has significant implications for the future of American entertainment.
- Paramount’s bid guarantees production cuts, while Netflix has pledged to stick with Warner’s theaters-first approach.
- Netflix has a stronger track record of creative success, with 26 Oscars since 2017, compared to Paramount’s one.
- The acquisition of Warner Bros. would give Netflix the opportunity to create new forms of user-driven entertainment, leveraging its tech and innovation capabilities.
- The deal has significant implications for the film industry, its workers, and the streaming wars, and consumers, workers, investors, and regulators should be ready to support Netflix’s bid.
Introduction to the Bidding War
The contest between Netflix and Paramount for Warner Bros. has all the makings of a Hollywood blockbuster, with Gulf State plutocrats, Jared Kushner, and Larry Ellison all playing a role. However, beneath the drama and intrigue, the real story is about the future of American entertainment. Paramount’s bid is based on the idea that it can save American movie-making, while Netflix’s bid is focused on acquiring new programming for its distribution network and creating new forms of entertainment.
The Future of American Entertainment
Paramount’s argument that Netflix would scale back production and gut the cultural ritual of theatrical release defies common sense. Netflix has pledged to stick with Warner’s theaters-first approach, and its top executives acknowledge that theatrical release builds interest that boosts their performance on streaming. With super-premium products like Warner’s DC franchise and cinematic mainstays such as James Bond, Harry Potter, and Gandalf the Wizard, it’s no surprise that Netflix is committed to maintaining the traditional model. In contrast, Paramount’s bid guarantees production cuts, with the company promising to generate $6 billion in savings by combining the two historic LA production lots and shuttering one of them.
Creative Chops and Debt
The question of whether Paramount has the creative chops to keep Warner Bros. a content powerhouse is a significant one. Warner Bros. has had three billion-dollar releases since 2017, including "Aquaman," "Joker," and "Barbie," while Paramount has had just one, "Top Gun: Maverick." Since 2017, Warner has won 19 Oscars, while Netflix has won 26, and Paramount has won just one. This raises significant doubts about Paramount’s ability to bring superior creative insights to Warner Bros. Furthermore, Paramount’s massive post-deal debt, which it projects to be 6.8 times its annual earnings, is a significant concern. In contrast, Netflix’s debts would be less than a third of Paramount’s when compared to earnings by 2027.
A New Era of Entertainment
The most important difference between the two bids is that Paramount wants to acquire Warner Bros. to become today’s Netflix, while Netflix wants to acquire Warner Bros. to create something new beyond today’s Netflix. For movie fans, creative industry workers, and policymakers, the question is which deal is more intriguing. Paramount’s effort to win through scale ignores the commanding presence of entertainment industry behemoths like YouTube, Disney, and TikTok. YouTube dominates global "viewing share," capturing almost 13 percent of audience attention, far outstripping Netflix at 8 percent. Netflix can take pride in its steady growth to 300 million subscriptions, but that’s a small fraction of YouTube’s nearly 3 billion active users.
The Global Entertainment Revolution
The global entertainment industry is undergoing a significant revolution, with TikTok and Reels leading the charge. Chinese creators are turning out programs with 90 episodes, each 2 minutes long, and AI is set to turn content creation into a spiraling free-for-all, blending imagination and ingenuity. Recently, Disney reached a deal with Open AI’s Sora app, letting users make social videos out of Disney properties. Netflix, armed with Warner’s library, can not only turn Harry Potter or James Bond into new television series but also launch them into whatever new forms of user-driven entertainment emerge from the scrum. Warner gives Paramount a last-ditch stand to survive in today’s entertainment industry, but it would be the rocket fuel that helps propel Netflix into the globalized, atomistic industry of the future.
Conclusion
In conclusion, the contest between Netflix and Paramount for Warner Bros. has significant implications for the future of American entertainment. Netflix’s bid offers support for the film industry and its workers, a new future for Warner Bros., and a competitive champion in the streaming wars. With its strong track record of creative success, its commitment to maintaining the traditional theatrical release model, and its ability to leverage its tech and innovation capabilities to create new forms of entertainment, Netflix is the clear choice for consumers, workers, investors, and regulators. As the entertainment industry continues to evolve, it’s clear that Netflix is poised to play a leading role in shaping its future.