Netflix $NFLX ( ▲ 0.64% ) spent years insisting it could build everything itself. Now it is preparing to buy the studio and streaming businesses of Warner Bros. Discovery $WBD ( ▲ 1.96% ) , a move that contradicts its long-held stance on avoiding major acquisitions. The shift comes despite co-CEO Ted Sarandos repeatedly telling investors that Netflix prefers to create, not buy, and that the company has plenty of runway following its existing playbook.
Sarandos did acknowledge that an opportunity large enough could justify a pivot. A package that includes HBO and a century-deep film library appears to qualify. Still, the reversal highlights more than a simple strategy change. It points to a deeper tension within Netflix as streaming faces pressure from a new threat.
Short-form apps are squeezing streaming
Analysts say the bigger force behind this deal is competition from TikTok, YouTube, Instagram, and Snapchat. Jeffrey Wlodarczak of Pivotal Research downgraded Netflix and wrote that short-form entertainment is doing to streaming what streaming once did to cable. Younger users are spending more time scrolling and less time watching long shows, which has led to flat or weakening engagement numbers on Netflix.
As Wlodarczak put it, the platform is confronting a world where consumer attention is shifting again, and expensive content acquisitions are becoming a way to defend its position. YouTube still dominates TV watch time, and Netflix now finds itself fighting the same disruptors it once outpaced.
Netflix has a long list of things it said it would not do, then did
Ads: Netflix built its identity around ad-free viewing. That changed in 2022 when subscriber losses pushed the company to launch an ad-supported tier after Reed Hastings had insisted for years that ads were not aligned with Netflix’s model. The move opened up a fresh revenue stream and addressed price-sensitive customers.
Password sharing: Netflix once encouraged the cultural meme that "love is sharing a password." Eventually, love stopped paying the bills. The company reversed course and began charging for extra users, helping to shore up subscriber numbers and revenue.
Live TV, games, sports: For years Netflix said it wanted to stay laser-focused on streaming. Hastings warned that adding features like live TV or games risked turning Netflix into something cluttered. Today, Netflix offers live events, sports content, and an expanding slate of games as a way to boost engagement and keep pace with rivals.
Buying a major piece of Warner Bros. Discovery is a different level of reversal. It is not just Netflix doing something it once said it would never do. It is Netflix acting exactly like the traditional media giants it once disrupted, leaning into consolidation to defend its next chapter.