Netflix Set to Buy Warner Bros for $82.7B, Cinema Future in Question

In a groundbreaking transaction of US$82.7 billion (A$124.5 billion), Netflix has revealed its intention to purchase Warner Bros, thus making a tremendous impact on streaming and film industries. The acquisition has drawn fire from both the filmmakers and the audience while raising the regulators in the U.S. to power of content question that have been brought about cinema's future. Midst the licensing banes, Paramount Skydance quickly followed and made a hostile bid that was aimed at securing the shares of Warner Bros.

Veteran of Hollywood, Jane Fonda, expressed her concern regarding the merger and branded it as "catastrophic" with a warning that it could endanger the entire entertainment ecosystem.

Streaming giant, Netflix, has mainly turned its back on acquisitions as a means of developing the company and has instead put all its energy into creating original hits like Stranger Things and Squid Game. In contrast, other players in the market such as Amazon have actively pursued the acquisition of established studios, with MGM being a recent acquisition in 2022. On the other hand, Warner Bros which has built up a vast movie archive of over a century, ranging from the early days of Looney Tunes all the way to the Emmy-winning series The White Lotus, is now a rare case of a studio being put up for sale. Although, the possession of such a library would allow Netflix to license out the most-watched titles like Friends for less.

The suggested merger has initiated a discussion focusing on the impact on theatrical releases. Ever since the introduction of streaming services, the global cinema attendance has been on a declining trend which was aggravated by the new normal COVID-19 pandemic and most forecasts 2025 box office sales will be 13% lower than pre-pandemic levels.

In the past, Netflix has always had a very limited release of films in theatres just to be able to apply for various awards, Oscar being among them. Co-CEO Ted Sarandos has made a big impact with his comments about Netflix’s main strategy being the one focused on home viewing. However, the major franchises of Warner Bros, like Batman and Minecraft, will probably still be released in theatres. It is very likely that the original or the mid-budget projects will get the least or no theatrical runs.

Warner Bros' latest movies such as Ryan Coogler’s Sinners and Paul Thomas Anderson’s One Battle After Another have done really well in cinemas. Sarandos stated Netflix's goal is to reduce the time between theatrical and streaming availability, which indicates a turn towards faster home releases.

For a long time, the theatrical windows have been getting shorter and shorter. Films like Top Gun made a lot of money from home video even long after their theatrical runs. Theatrical release shortening for Alice in Wonderland was facing objections from cinema owners even in 2010. Presently, blockbuster movies are able to move to premium video-on-demand in a matter of weeks.

Sinners is one of the original films that highlight the persistent importance of theaters. Even with a not so spectacular initial opening, Sinners managed to gross more than US$260 million (A$390 million) at the U.S. box office, proving that the effect of the audience engagement is multiplied when done through a common viewing.

Skydance is interested in Warner Bros after its acquisition of Paramount, as the company has expressed its interest. David Ellison, the company's head, has emphasized the dedication to theatrical releases by committing to 30 films a year in cinemas with the traditional release windows.

The Netflix-Warner Bros merger will probably come under the microscope of regulators, who will evaluate it with respect to antitrust issues. The joining together of HBO, Netflix, and Warner Bros could go a long way in creating a monopoly in the market, and this is the same anti-competitive effect that the sector got through the blocking of the Penguin Random House-Simon & Schuster merger by the Biden administration.

At another time, Netflix modified its business model and moved away from the original “all episodes at once” release strategy. The company diversified its activities by incorporating live content, sports, and advertising. This flexibility in the company's direction does indicate that if there is a demand, the company will be very likely to embrace more traditional cinema practices.

Youth segments are still showing a love for live entertainment, as the popularity of theatrical releases like A Minecraft Movie, Taylor Swift concert films, and KPop sing-along events are all indicators. These happenings suggest that being at the cinema with others is still a valued experience and Netflix’s new territories might even entail selective theatrical releases in the coming days.