Is Paramount Skydance or Netflix A Better Home for Warner Bros.?
Netflix would be a closed ecosystem for Warner Bros. IP while PSKY's Oracle partnership points toward open marketplaces—revealing radically different futures for the same acquisition target
Last week, I analyzed how a Paramount Skydance (PSKY) acquisition of Warner Bros. Discovery (WBD) might unfold based on their Oracle partnership. But rumors of Netflix interest in Warner Bros. suggest a different technological outcome entirely.
A Netflix acquisition would represent only the second major Hollywood studio purchase by a technology company since Amazon's MGM deal. Unlike Amazon—where Prime Video serves a broader ecosystem—Netflix's entertainment-focused business model would make Warner Bros. core to both its streaming and emerging gaming operations.
Obvious questions revolve around whether Netflix will have the stomach for glomming both a cable business—HBO has six linear channels—and a theatrical distribution business—which Co-CEO Ted Sarandos has labeled “outdated”—onto its technology-focused culture and operational structure. If the past is precedent, Netflix will phase these out.
Given that ultimately Netflix will be integrating Warner Bros.' IP library into its direct-to-consumer (DTC)-first, technology-first approach points to a more interesting question: What would Netflix do differently than PSKY's potential business models?
PSKY
Last week, I argued there were two likely models to emerge from any PSKY acquisition of WBD. First, it could build a "digital everything product": All television series, movies, news and live sporting events for one price in one seamless interface.
Second, it could also build a Premium video-on-demand model but driven by the per-month usage economics of the cloud.
Whatever the outcome, the solutions will need to eliminate the walled garden dynamics that trapped Disney’s streaming efforts, enable market-based content pricing, and create participatory user experiences rather than passive viewing.
DTC
An acquisition by Netflix would be purely DTC and integrate the entire Warner Bros. library into the Netflix app. This would be a clearer outcome than whatever PSKY may have planned with Oracle.
