Three reasons Netflix needs Warner Bros. Discovery and HBO

Netflix and Paramount are continuing to battle it out over who gets to buy part or all of Warner Bros. Discovery, with the latest salvo focused on the sources of their financing.

Netflix, the world’s largest paid streamer, arguably has the most to gain — and the most to lose. Here are three reasons Netflix is likely to keep pushing for Warner Bros. Discovery’s studio and HBO assets.

Netflix has been struggling to add subscribers

Netflix’s subscriber growth has slowed as the service approaches saturation in its most lucrative markets. After crossing 300 million paid subscribers, the company stopped regularly reporting membership numbers at the start of the year — a tacit acknowledgment that headline growth would be harder to sustain as the business matures.

That challenge is already becoming visible. Engagement has leveled off. And Morgan Stanley estimated that much of Netflix’s subscriber growth this year has come from its lower-priced ad-supported tiers, putting pressure on average revenue per user. To keep customers paying — and to justify higher prices over time — Netflix needs fewer casual viewers and more reasons for subscribers to stick around.

HBO’s steady pipeline of appointment hits — shows people make time to watch — offers exactly that kind of retention power.

Great content is really expensive and hard to come by

Making great television is expensive — and success is far from guaranteed. Netflix has built its business on producing a vast volume of shows and movies, many of which briefly attract viewers before quickly fading from the cultural conversation.

Even so, the spending is enormous. Since 2020, Netflix has spent roughly $87 billion on content assets — more than it would likely cost to acquire Warner Bros. Discovery’s studio and HBO, including a film library built over more than a century.

HBO takes a different approach. It spends heavily, but on far fewer projects, with a higher likelihood that each one becomes a durable hit. In other words, HBO has historically been more efficient at turning prestige programming into long-term cultural — and financial — value.

The biggest tech platforms are circling Netflix’s territory

The third pressure point is coming from outside traditional streaming. Netflix has increasingly framed its competition as broader than rival subscription services — a claim that certainly invites skepticism and is a convenient way to avoid antitrust concerns. After all, does short-form, user-generated video really compete with prestige television and film?

However, in practice, the lines are blurring. In the US, people now spend more time watching Google’s YouTube on TV screens than Netflix, and YouTube has been moving further into Netflix’s lane by offering lower-cost, TV-focused subscription bundles that compete more directly on price and content.

Meanwhile, social platforms are openly reconsidering their long-held resistance to premium video. Semafor reported this week that Instagram head Adam Mosseri acknowledged Meta may ultimately need premium or long-form content to work — a market the company had “explicitly decided not to enter.”

As tech platforms move upmarket and experiment with paid video, Netflix faces competition not just for attention, but on price and distribution. HBO-style content — scarce, prestigious, and culturally central — is harder to replicate or undercut.