Tech Tonic | Netflix sent an email

Netflix may have announced its intent to acquire Warner Bros. in personalised emails to its subscribers, but things are far from complete. Regulatory and shareholder approvals are still needed, and the earliest you’re looking at this being a done deal is by the end of this financial year. That is, if the stars align. The big question regulators must decide on, and therefore hinge the approvals, is whether this becomes something of a monopoly. Paramount, which was also in the running to acquire Warner Bros. must surely have something to say on how things have shaped up thus far.

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Little surprise that Netflix bosses sought to use the earnings call as a platform (this was late last week, after the intent for this deal was announced), to assure investors that they knew what they were doing. Warner Bros. has a history of mergers and acquisitions, which haven’t exactly worked out. The merger of AOL and Time Warner in 2000, AT&T’s reported $85 billion acquisition of Time Warner in 2018, and the 2022 merger with Discovery, are some milestones in a struggle that marks Warner Bros. as not being an easy partner.

As for any claims that Netflix-Warner Bros. would become a monopoly, they could well turn around and claim Google’s YouTube is a bigger entertainment company. YouTube worldwide has almost 2.7 billion subscribers and counting, while Netflix has 277 million subscribers (and there is no free tier, by the way). But if we are to look at core streaming platform numbers, JustWatch data seems to suggest that in the US, Amazon Prime Video leads (21%) followed closely by Netflix (20%), which in turn is followed by HBO Max (13%; this is part of the deal) and Disney+ (also 13%).

There are reports, and I would suggest giving little weightage to those, which seem to suggest the Donald Trump administration may have a preferential say between Netflix and Paramount in the Warner Bros. Deal. Tech bosses regularly visit the White House, reading anything more into that would be a fallacy. If this were to be the case, wouldn’t Paramount with CEO David Ellison, whose father is Larry Ellison and has close ties to the current administration, secured the deal instead?

The question now is, what happens to Netflix as we know it, if and when the deal does go through. Chances are, expect there will be changes. First up, the timing of the deal is interesting — Netflix bosses insist that’s because Warner Bros. was up for sale now, but there is the looming prospect of Apple’s streaming efforts, Apple TV, marking more in terms of investments and therefore content as well as footprint, through the next few years. The fact that Apple now has the streaming rights for F1 in the US starting next year, a big fillip for the Cupertino based tech giant. Services, of which Apple TV is part, are a key revenue stream for them and they’d do little to jeopardise that.

Netflix for now insists it is too early to talk about the specifics of changing contours. But mark my words — prices will go up. Secondly, there may be a scenario where theatrical releases from Warner Bros. Studios will decrease. Netflix after all is close to a pure streaming play, with focus on subscribers, engagement and priority with exclusives. Theatres will be seen as an afterthought, albeit not completely ignored.

Netflix did indeed send an email. If this deal goes through, Netflix won’t just be streaming Hollywood — it’ll be owning it, reorganising it, and maybe even tweaking the release schedule wisdom. Theatres can sulk, Paramount can grumble, and regulators too can perform their favourite ritual of acting surprised. But somewhere in Los Gatos, it wouldn’t at all be surprising if an employee (or an AI chatbot) is asked to draft another breezy subscriber email saying, “Your Netflix pricing has changed.” Do not, at all, be surprised.

Vishal Mathur is the Technology Editor at HT. Tech Tonic is a weekly column that looks at the impact of personal technology on the way we live, and vice versa. The views expressed are personal.