There may be concern that subscribers is perhaps negatively affected if Netflix acquires Warner Bros. Discovery’s streaming and film studios companies. One of many largest fears is that the merger would result in greater costs as a result of much less competitors for Netflix.
Throughout a US Senate listening to Tuesday, Netflix co-CEO Ted Sarandos prompt that the merger would have an reverse impact.
Sarandos was talking at a listening to held by the US Senate Judiciary Committee’s Subcommittee on Antitrust, Competitors Coverage, and Shopper Rights, “Examining the Competitive Impact of the Proposed Netflix-Warner Brothers Transaction.”
Sarandos aimed to persuade the subcommittee that Netflix wouldn’t turn out to be a monopoly in streaming or in film and TV manufacturing if regulators allowed its acquisition to shut. Netflix is the biggest subscription video-on-demand supplier by subscribers (301.63 million as of January 2025), and Warner Bros. Discovery is the third (128 million streaming subscribers, together with customers of HBO Max and, to a smaller diploma, Discovery+).
Talking on the listening to, Sarandos stated: “Netflix and Warner Bros. each have streaming companies, however they’re very complementary. In actual fact, 80 p.c of HBO Max subscribers additionally subscribe to Netflix. We are going to give shoppers extra content material for much less.”
Throughout the listening to, Democratic senator Amy Klobuchar of Minnesota requested Sarandos how Netflix can be sure that streaming stays “inexpensive” after a merger, particularly after Netflix issued a price hike in January 2025 regardless of including extra subscribers.
Sarandos stated the streaming trade remains to be aggressive. The manager claimed that earlier Netflix value hikes have include “much more worth” for subscribers.
“We’re a one-click cancel, so if the buyer says, ‘That’s an excessive amount of for what I’m getting,’ they’ll cancel with one click on,” Sarandos stated.
When pressed additional on pricing, the chief argued that the merger doesn’t pose “any focus threat” and that Netflix is working with the US Division of Justice on potential guardrails in opposition to extra value hikes.
Sarandos claimed that the merger would “create extra worth for shoppers.” Nonetheless, his thought of worth isn’t nearly how a lot subscribers pay to stream however about content quality. By his calculations, which he offered with out additional particulars, Netflix subscribers spend a mean of 35 cents per hour of content material watched, in comparison with 90 cents for Paramount+.
The Netflix stat is just like one offered by MoffettNathanson in January 2025, discovering that within the prior quarter, on common, Netflix generated 34 cents in subscription charges per hour of content material considered per subscriber. On the time, the analysis agency stated Paramount+ made a mean of 76 cents per hour of content material considered per subscriber.
Downplaying Monopoly Issues
Netflix views Warner as “each a competitor and a provider,” Sarandos stated when subcommittee chair Republican senator Mike Lee of Utah requested why Netflix desires to purchase WB’s movie studios, per Variety. The streaming government claimed that Netflix’s “historical past is about including increasingly” content material and selection.
Throughout the listening to, Sarandos argued that streaming is a aggressive enterprise and pointed to Google, Apple, and Amazon as “deep-pocketed tech corporations making an attempt to run away with the TV enterprise.” He tried to downplay considerations that Netflix may turn out to be a monopoly by emphasizing YouTube’s excessive TV viewership. Nielsen’s The Gauge tracker reveals which platforms Individuals use most when utilizing their TVs (versus laptops, tablets, or different units). In December, it stated that YouTube, not together with YouTube TV, had extra TV viewership (12.7 p.c) than some other streaming video-on-demand service, together with second-place Netflix (9 p.c). Sarandos claimed that Netflix would have 21 p.c of the streaming market if it merged with HBO Max.
