The Warner Bros. Discovery-Paramount-Netflix drama has Hollywood in a tizzy this week — but it’s missing one big thing: What about you?
Americans are deep in a new era of entertainment and are increasingly likely to get their fix on YouTube and TikTok rather than with WBD’s popular franchises like Harry Potter and “Game of Thrones.”
The headlines around the deal have focused on whether Netflix or Paramount’s David Ellison will win in the boardroom. But the results in your living room will be due to forces that are much bigger than the companies themselves, and have changed the way we watch. Movie theater releases are down, cable TV is dying, streaming prices are likely to rise, and Hollywood’s power is waning in the age of tech giants.
What the fight for Warner Bros. could mean for jobs and how you watch TV
The reason companies like Netflix and Paramount want to buy Warner Bros. is because competition in the entertainment industry is fierce, driven by the decline of cable TV and the rising popularity of small screens and tech companies.
“If Big Tech never made a move into media, there’s a very good chance we wouldn’t be seeing this much consolidation as we are now,” said Brandon Katz, an entertainment analyst at Greenlight Analytics.
Now that Americans spend more time with the big players in entertainment like Google-owned YouTube, Netflix, and Amazon, mergers can help legacy players like Disney, Fox, and Comcast compete. It’ll mean lost jobs. The combo that formed WBD led to multiple rounds of layoffs, including about 1,000 roles in mid-2024. Both Paramount and Netflix present themselves as the bigger job savers, but both promise billions in “synergies” that will likely result in cuts.
“The problem is the acquisition and pending consolidation of two media giants, not who the buyer is,” said The Writers Guild of America, the union representing TV and film writers.
Additionally, deals offer companies the opportunity to consolidate their brands. WBD has already combined HBO’s prestige shows with Discovery’s mainstream fare to form HBO Max, and Disney has brought Hulu and ESPN+ into its streaming bundle.
It all trickles down to what you get to watch, where you watch it, and how much you have to pay. Streaming prices have been increasing while big theatrical movie releases have declined over time, and there’s good reason to think those trends will continue, regardless of where Warner Bros. ends up. Industry trends for movie-going are clear, with the number of wide releases and box-office grosses still below their pre-COVID levels.
Streamer prices could increase while less stuff gets made
Whoever ends up with Warner’s HBO Max will likely bundle it with their existing streamer and raise the price based on the more expansive offering, Katz said.
“Within 18 months, all consumers should expect to be paying more for these subscriptions,” he said.
It’s also widely expected that the combination of two of these companies will lead to less output. That’s one of the main objections of Hollywood, whose livelihood depends on stuff getting made.
“This is one less entity writing checks,” said Josh Rosenbaum, a producer at Waypoint Entertainment, whose credits have included Yorgos Lanthimos’ Oscar-winning “The Favourite.”
Paramount promised that if it wins the WBD battle, it’ll release 30 movies a year in theaters, while Netflix says it’ll continue to put Warner Bros. movies in theaters while favoring a quick-to-streaming strategy for its own films. The Disney and Fox merger is a cautionary tale; their combined theatrical releases have declined nearly 50% since the merger was announced in 2017.
The dinosaurs may be fighting a losing battle. People (especially younger generations) are increasingly getting their entertainment from user-generated platforms. A Hub Entertainment Research survey found that people aged 13 to 24 spend an estimated 21% of their screen time watching non-professional videos on platforms like YouTube and TikTok, compared to just 16% spent on traditional TV shows. In contrast, people aged 35 and up spend 39% of their screen time on TV shows — more than twice as much as they spend on online videos (14%).
That’s put pressure on traditional players. YouTube — not any traditional Hollywood powerhouse — is the No. 1 streaming service on TVs, according to Nielsen. Netflix’s engagement per user has stagnated over the past few years, despite the company’s increased spending on content, while YouTube has widened its lead on TV screens, according to Bernstein research. Netflix and other leading streamers have taken steps to bring social media-first creators and video podcasters onto their platforms, but show no signs of fundamentally changing their models.
“The real threat to the media industry in general is the new formats like short form,” Bernstein analyst Laurent Yoon said. Paramount is at least talking about a technology-led overhaul of how entertainment is made, which has investors intrigued. But whatever changes it makes are likely to be incremental in the near term, he said.
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