Netflix is eating Hollywood — because it has to

Summary of Netflix is eating Hollywood — because it has to

by The Verge

55m•January 29, 2026
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Overview of Decoder — "Netflix is eating Hollywood — because it has to"

This episode (host Nilay Patel, guest Julia Alexander of Puck) unpacks the bidding war over Warner Bros. Discovery (WBD), why Netflix appears bent on buying the studio, what Paramount/Skydance (backed by David and Larry Ellison) is trying to do, and how this fight reflects the deeper industry pressure: a battle for attention in an era of short-form video, games, and looming AI-generated “slop.” The conversation lays out the strategic and cultural stakes—library vs. originals, theatrical vs. streaming, tech vs. legacy media—and the regulatory/political risks that could still reshape the outcome.

Key takeaways

  • Netflix is the apparent winner of the WBD auction (reportedly ~$83B for studios/content, not cable networks). Paramount/Skydance keeps upping the ante with a larger, hostile bid (reportedly ~$108B including cable).
  • Netflix’s motive: defensive and strategic — buying a massive library and IP to boost engagement and retention amid saturation and competition from free, short-form platforms (TikTok, YouTube, Instagram).
  • The deal is as much about preserving premium viewing minutes on TV sets as it is about owning marquee franchises; Netflix believes a large library accelerates international growth and ad-supported opportunities.
  • Paramount’s plan is largely the same as prior WBD/Discovery strategies (bundle cable + IP + streaming) — the main difference is the Ellison family’s deep pockets. But cable networks are declining assets likely to be sold to private equity.
  • The central industry pressure is attention fragmentation: streaming, short-form, gaming, and soon AI-generated video are all competing for the same minutes on connected TVs and phones.
  • Regulatory and political risk remains (antitrust review, possible intervention by the current administration), so the outcome isn’t fully certain.

Players & offers (concise)

  • Netflix: Reported bid ~ $83 billion for Warner Bros studios and content (excluding cable networks). Motivated by engagement, retention, and international leverage.
  • Paramount/Skydance (David Ellison): Counteroffers including cable networks, reportedly up to ~$108B — backed by Larry Ellison’s wealth and willing to make a hostile bid.
  • Warner Bros. Discovery (David Zaslav): Put the company up for auction after years of restructuring and mismanagement; shareholders prefer Netflix’s offer.
  • Political/regulatory actors: FTC/DOJ antitrust review and potential political influence (connections between Ellison, Hollywood execs, and the current administration) could affect approval.

Why Netflix wants Warner Bros.

  • Library & IP: WBD brings decades of content (movies, TV franchises) that are expensive/time-consuming to build organically; libraries attract viewers on AVOD/FAST (free ad-supported) services and boost long-tail engagement.
  • Retention & engagement: Netflix has hit saturation in big markets; retention (reducing churn) is now a primary metric. Proven IP helps keep subscribers in a fragmented attention economy.
  • Global scale: Netflix argues it can better monetize WBD IP internationally and across languages than legacy owners.
  • Dual bet strategy: Netflix is simultaneously experimenting with low-cost/UGC-style formats (podcasts, cheaper reality) and preserving a premium tier—hence the push to own big IP.

Why Paramount (Ellison) keeps bidding — and why it’s controversial

  • Similar strategy: Paramount’s public plans echo past WBD plans—use a bundle of cable revenue and linear assets to fund premium IP and streaming scale.
  • Key difference: Larry Ellison’s deep pockets and willingness to backstop a risky media acquisition. That financial heft makes Paramount’s bid credible, but not necessarily strategically superior.
  • Criticism: Cable networks are dying assets; consolidation of legacy media into another conglomerate may not solve the core problem (competition with short-form and platforms that cost almost nothing to supply content).
  • Public perception: Hollywood creatives and many shareholders mistrust the Ellison approach—seen as a billionaire play with little fresh strategy beyond throwing money at IP.

Library vs. Originals — what’s changed

  • Originals used to be the path to prestige and scale (the “become HBO” thesis). But streaming economics (shorter series runs, limited series preference, acquisition/retention efficiency) make it hard to build decades-long tentpole TV properties the way broadcast/cable once did.
  • Broadcast/cable could underwrite long-running shows with ad revenue and affiliate fees. Streaming needs rapid ROI on content and tends to favor limited series or shows that produce quick acquisition/retention benefits.
  • Libraries (back catalogs and franchises) deliver reliable, long-tail viewership—important now as AVOD and short-form siphon attention. That explains why Netflix is willing to pay a huge premium.

Theatrical, prestige, and Hollywood’s cultural concerns

  • Theatrical window still matters to Hollywood for prestige, revenue, and star-level careers; theatrical releases generate higher awareness and often stronger streaming engagement later.
  • Netflix has made limited theatrical commitments (e.g., reported 45-day windows) but is still perceived as less committed to theatrical culture than legacy studios. That tension shapes creatives’ reactions to any buyer.
  • Paramount/other buyers promise theatrical-first strategies but historically have struggled to sustain the release cadence and quality needed.

Tech, attention, and AI — the existential threat

  • The fight is ultimately over attention. Short-form video, gaming platforms (Fortnite, Roblox), and user-generated content are eating away at TV minutes—these formats cost near-zero for the platforms.
  • AI threatens to flood the market with cheap, endless video “slop.” Only a few companies (Netflix among them) are trying to plan for that future; others are doubling down on scale or tech narratives without clear content strategies.
  • Executives are asking whether “quality” can once again be a differentiator in a scale-driven, ad-oriented ecosystem focused on connected TVs.

Regulatory & political risks

  • Antitrust reviews (FTC/DOJ) and political influence could complicate approval. The Ellison family’s political connections raise the possibility of intervention or pressure that might alter the outcome.
  • Netflix appears confident publicly, but regulatory outcomes are uncertain—especially under the current administration where political ties could matter.

Bottom line / likely outcome

  • Industry view from the episode: Netflix is the likely acquirer, but the deal is probably massively overpriced and mainly a defensive bet to secure long-term attention and retention. It’s "the most expensive defensive bet in entertainment" and may look overpriced in hindsight, though strategically sensible for Netflix’s goals.
  • Paramount’s effort is aggressive and dramatic but lacks a materially different strategic roadmap beyond funding and scale via the Ellisons.
  • Even if Netflix succeeds, execution (integrating WBD, extracting value, navigating theatrical expectations, adapting to AI/short-form disruption) will determine whether the buy pays off.

Notable quotes & insights

  • “They have to do it.” — Julia Alexander on why Netflix feels compelled to buy WBD.
  • The acquisition is framed as “a very traditional media play” by a tech disruptor that now needs traditional media assets to compete.
  • The deal is at once offensive (owning IP to grow) and defensive (preventing competitors from owning the same library).

What to watch next (actionable signals)

  • Regulatory filings and any formal antitrust review by FTC/DOJ.
  • Warner shareholders’ votes and any further Paramount/Skydance escalation (hostile offer details).
  • Netflix’s post-deal integration plan: how they handle theatrical windows, ad business, and international rollouts of WBD IP.
  • Creative/industry reaction (talent deals, production commitments) that signal whether Hollywood will lean into Netflix’s model or resist.
  • Developments in short-form and AI tools that change attention economics (e.g., TikTok/YouTube on TV, major AI content launches).

Why this matters beyond corporate drama

This saga is a proxy for how media will be organized in the coming decade: whether legacy IP and studios can survive and be repurposed for a world dominated by short-form attention and AI-generated content, or whether the platforms that own distribution and data will relegate old studios to niche roles. The buyer who figures out how to tie premium IP, ad economics, and new-format discovery on TV sets stands to shape the next era of entertainment.