There’s concern that subscribers is likely to be 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 resulting from much less competitors for Netflix.
Throughout a US Senate listening to Tuesday, Netflix co-CEO Ted Sarandos instructed 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 develop into a monopoly in streaming or in film and TV manufacturing if regulators allowed its acquisition to shut. Netflix is the most important 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 mentioned: “Netflix and Warner Bros. each have streaming companies, however they’re very complementary. Actually, 80 p.c of HBO Max subscribers additionally subscribe to Netflix. We are going to give shoppers extra content material for much less.”
Through the listening to, Democratic senator Amy Klobuchar of Minnesota requested Sarandos how Netflix can make sure that streaming stays “reasonably priced” after a merger, particularly after Netflix issued a price hike in January 2025 regardless of including extra subscribers.
Sarandos mentioned the streaming trade remains to be aggressive. The manager claimed that earlier Netflix worth hikes have include “much more worth” for subscribers.
“We’re a one-click cancel, so if the patron says, ‘That’s an excessive amount of for what I’m getting,’ they will cancel with one click on,” Sarandos mentioned.
When pressed additional on pricing, the manager argued that the merger doesn’t pose “any focus threat” and that Netflix is working with the US Division of Justice on potential guardrails towards extra worth hikes.
Sarandos claimed that the merger would “create extra worth for shoppers.” Nevertheless, his thought of worth isn’t nearly how a lot subscribers pay to stream however about content quality. By his calculations, which he supplied 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 much like one supplied 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 mentioned Paramount+ made a mean of 76 cents per hour of content material considered per subscriber.
Downplaying Monopoly Considerations
Netflix views Warner as “each a competitor and a provider,” Sarandos mentioned when subcommittee chair Republican senator Mike Lee of Utah requested why Netflix needs to purchase WB’s movie studios, per Variety. The streaming government claimed that Netflix’s “historical past is about including increasingly more” content material and selection.
Through the listening to, Sarandos argued that streaming is a aggressive enterprise and pointed to Google, Apple, and Amazon as “deep-pocketed tech corporations attempting to run away with the TV enterprise.” He tried to downplay issues that Netflix might develop into a monopoly by emphasizing YouTube’s excessive TV viewership. Nielsen’s The Gauge tracker exhibits which platforms People use most when utilizing their TVs (versus laptops, tablets, or different gadgets). In December, it mentioned 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.
