Netflix-Warner Bros. Deal Yet Another Disaster For Hollywood

If it seems like it's been one step forward, two steps back for the entertainment industry in recent years, that's because it has been. And the massive new deal announced Friday — Netflix buying Warner Bros. Studios and associated businesses — is the latest step backward.

Hollywood was riding high at the end of 2019 thanks to massive hits like Avengers: Endgame, Frozen II, Spider-Man: Far From Home, and Toy Story 4. A few months later, the bottom fell out of the business. The useless COVID-19 lockdowns shut down movie theaters, public spaces, and kept billions stuck at home.

The industry adapted by building out streaming services, hoping homebound consumers would commit to monthly fees. Netflix, HBO Max, Disney+ — all showed early growth, signaling that the streaming bet might have worked. To an extent, anyway. But fast-forward a few years and the streaming revolution helped obliterate Hollywood’s box office revenues — combined with self-inflicted wounds from an exclusionary group of executives, creatives, and public-facing "talent."

Global box office in 2019 was $42.5 billion. So far in 2025, adjusting to 2019 dollars, it's just $27.1 billion. That is a catastrophe. And it's their own fault. With Netflix buying Warner Bros., it’s about to get worse.

Netflix headquarters in Los Angeles, California, US, on Friday, Dec. 5, 2025. Netflix Inc. has lined up $59 billion of financing from Wall Street banks to help support its planned $72 billion acquisition of Warner Bros. Discovery Inc., which would make it one of the largest ever loans of its kind. Photographer: Ethan Swope/Bloomberg via Getty Images

Netflix Could Decimate Movie Theaters

Netflix head Ted Sarandos has previously spoken about movie theaters being an "outdated" concept, and that he believes his company is saving Hollywood. Well, it's telling that his company has now taken a massive bet by buying a studio whose entire business model was built on making films for movie theaters.  

Why would they do that? Because they want to take major studio first-run properties, and put them on Netflix as soon as possible. Essentially shortening the window that people have to wait between a movie being released in theaters and hitting a streaming service. Netflix has already done this with several of its full-length movies, putting them in theaters for a week or two, then adding them to their platform. This is literally what Sarandos said in the wake of the deal being announced. 

"My pushback has been mostly in the fact of the long exclusive windows, which we don’t really think are that consumer-friendly... I wouldn’t look at this as a change in approach for Netflix movies or for Warner movies. I think, over time, the windows will evolve to be much more consumer-friendly, to be able to meet the audience where they are quicker…I’d say right now, you should count on everything that is planned on going to the theater through Warner Bros. will continue to go to the theaters through Warner Bros., and Netflix movies will take the same strides they have, which is, some of them do have a short run in the theater beforehand. But our primary goal is to bring first-run movies to our members, because that’s what they’re looking for." 

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But as the industry has learned over the past decade, the streaming service model is an extremely tough financial bet. It's hard to quantify what content is actually driving subscriptions, or people staying on the platform. That's why Netflix is taking this gamble; they believe they can leverage Warner Bros. intellectual property, like "Harry Potter," HBO shows, "Batman," or "Superman," to keep people signing up for Netflix and staying on Netflix.

If you sign up for Netflix, the thinking goes, you'll be able to see the latest "Batman" sequel or reboot exclusively on their platform just a week after it hits theaters. It might make sense for Netflix, but it sure doesn't bode well for movie theaters or the industry at large. 

Netflix has a shaky track record for quality. Many of their series or movies have simply not lived up to theatrical quality entertainment, despite high production values and big-name talent. They've focused on quantity over quality, churning out show after show, assuming that they'll find something for everyone. Outside "Stranger Things" and a few other notable exceptions, however, there's little that's crossed over to become a cultural event. Cultural events, like "Oppenheimer" and "Barbie," is precisely what Hollywood needs to get itself back on track. And now one of the most historic, established, legendary studios is going to be part of a streaming platform, where building up those events is virtually impossible.

The WB water tower is seen at Warner Bros. Studios, Burbank in Burbank, California on December 5, 2025. Streaming giant Netflix said December 5, 2025 it will buy film and television studio Warner Bros. Discovery for nearly $83 billion, the entertainment industry's biggest consolidation deal this decade. The acquisition gives Netflix access to a vast film catalog as well as the prestigious streaming service HBO Max. (Photo by Patrick T. Fallon / AFP via Getty Images)

Paramount Becomes Even More Important

Netflix also has an extremely shaky relationship when it comes to the politicization of the entertainment industry. Yes, they stood up for Dave Chappelle when his stand-up routine received criticism from transgender activists. But they've also introduced several shows aimed at children that featured highly objectionable content. 

There's little doubt that the company leans left, with its most prominent executives, like Reed Hastings and Sarandos, openly supporting Democratic Party candidates. For an industry that's lost millions of consumers because it's alienated them, that's not a great sign. Meanwhile, Paramount Studios new head David Ellison has come in for criticism for taking the opposite approach and focusing on content that appeals to a broader audience. 

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That makes him, and his studio, even more important. In an era where getting audiences to return to theaters has become harder and harder, Warner Bros. will now be controlled by a company that doesn't want them to. And when you cheapen your content and make it feel more disposable and replaceable, often, audiences agree. 

Maybe Netflix will learn their lesson, bringing their content up to the standards of traditional studios. Valuing the theatrical experience, putting quality over activism and leaning into what made Hollywood great in its golden era. Thus far, however, there's little to suggest that's likely. And it's going to make an already struggling industry that much worse.