By Andrew Wolf, Jr
If you like going to the movies, the proposed deal between Netflix and Warner Bros. should be on your radar. Should the merger be approved by regulators, 2025 could be remembered as a watershed moment for the movie industry specifically and the moviegoing public in general.
Netflix and Warner Bros. Discovery recently announced a deal for the streaming giant to acquire WBD’s film studio and streaming service, seemingly bringing an end to a months-long bidding process that saw Paramount Skydance and Comcast also vying for the assets – though Paramount did then mount a hostile takeover bid that throws the Netflix deal into question. Either way, Hollywood is in a panic.
Netflix – The End of the Box Office?
Unlike traditional movie studios, streaming companies like Netflix have not adhered to conventional theater distribution, and there are fears that big changes could be coming to an industry that is still struggling post-pandemic.
In short, movie theaters are dying, and here’s why: The appeal of going to see today’s movies has diminished. And whatever appeal remains is not enough to pull the movie business out of its disastrous run of woke, preachy, smug, insulting, and an utterly divisive downward spiral. People still want to go to the movies. There’s much evidence for this. If the movie is appealing enough (e.g. Top Gun: Maverick, Barbie, Avatar: Way of the Water, Spider-Man: No Way Home) people will forsake the small screen for the big one.
All Hollywood had to do to pull out of their suicide dive towards oblivion was to amend their appeal at the box office – make better movies. But, of course, that’s not what happened.
If one compares the movie industry business with that of streaming, the problem for Warner Bros. and the other studios comes into specific relief. With streaming (think Netflix and HBO Max) there is no need to motivate people to leave their homes and drive anywhere. They don’t need to pay “big bucks” for “big stars” to drive box office demand, and best of all, they can ignore the silent majority that has long ago tuned them out. Don’t like the trans agenda being imposed upon you? Too bad. Your view is met with stolid irreverence. And your boycotts are irrelevant to Netflix.
It’s the perfect solution to Hollywood’s box office problem. They can have everything they want – a virtue signaling paradise – and never have to worry about big budgets or low box office earnings ever again.
In other words, streamers have little incentive to create a product so entertaining, and thus appealing, that millions of people leave their homes to go see it.
To be honest, I have subscribed to Netflix in the past to see what it was like. And a few of their TV shows are entertaining. But let’s be clear: overall, the Netflix collection is junk driven by AI algorithms, audience apathy, and a generation looking for something they can watch while doom scrolling their smartphones.
If Netflix is allowed to absorb Warner Bros. – and in spite of Trump’s antipathy, the deal could be approved – there is a strong possibility that movie theaters will substantially decline in number or worse. Consider the fact that there will be fewer products (i.e. movies) – four major studios, instead of five. Netflix’s CEO, Ted Sarandos, says the company will continue releasing Warner Bros. titles into theaters, yet he is also signaling that the window of time between theater release and availability at home will be shortened (17 days instead of 45-90). This means subscribers to Netflix and HBO Max (which is part of the Warner purchase) will have little incentive to go to the theater. Why leave your house to go see a movie when you can stream it within a few weeks of its release?
The reality is that, at some point, Netflix will cease or restrict Warner theater releases. Why? It’s all about lower production and distribution costs and subscriptions.
Subscriptions
Netflix’s business model focuses primarily on one thing: subscriptions. That’s it. That’s all Netflix really cares about. But let’s be honest – that’s all Netflix should care about. One cannot blame Netflix for caring about what fuels the bottom line.
Unlike Adam Smith’s concerns for morals in corporate decisions, Sarandos follows the doctrine of Milton Friedman: The primary responsibility of corporations is to maximize profits for the shareholders.
Netflix is an entertainment company that primarily cares about what generates revenue – subscriptions. Why would it seek to potentially increase its operating costs by releasing movies into theaters? What Netflix is primarily selling is “exclusive content.” And if the only way to see a particular show or movie is by subscribing to Netflix, well, that’s just how the game is played. It’s the niche which streamers have carved out for themselves, and Warner Bros. understands this.
Warner Bros. chairman David Zaslav has no nostalgic wish to sustain movie theaters to preserve the art; remember, he shelved Batgirl so the company could take a tax write-off and recoup the cost of the unfinished movie ($90 million).
Zaslav also understands that the real money is in subscriptions, not box office. Hollywood dislikes having to appeal to the box office by pleasing people for whom it has utter disdain politically. But if you are willing to “subscribe” to low-cost AI algorithms as a means to creativity and profit, it doesn’t matter how much of your content is of poor taste.
Zaslav and ‘Real Money’
Netflix currently boasts 301.6 million worldwide subscribers. HBO Max has roughly 128 million worldwide subscribers. Once the merger happens, Netflix is looking at over 400 million subscribers.
Consider that even if Netflix charged only $1 a month, that would still add up to roughly $4.8 billion in revenue per year. The average customer, however, pays closer to $12 per month, so now we’re zeroing in on something like $58 billion per year.
Perhaps the most troubling part of this, though, is that Netflix will now control the Warner Bros. archives, which includes its libraries and catalogs – virtually all of the Warner Bros., MGM, and United Artists classic creations.
We are perilously close to experiencing a reality where just four major studios (and Netflix) will control much of America’s cinematic cultural content – what we are allowed to see, what is considered acceptable, and how it will be experienced.
~
Andrew Wolf, Jr. is director of The Fulcrum Institute, an organization of scholars dedicated to the classical liberal tradition. He has also been published stateside in American Spectator, The Thinking Conservative, and American Thinker, as well as abroad in International Policy Digest, Times of Israel, and The Daily Philosophy, among others.
