In 2012, Ted Sarandos, then Netflix’s chief content officer, explained that the nascent streaming service’s “goal” is “to become HBO faster than HBO can become us.” Well, it’s debatable if Netflix ever became HBO — I’d argue it did not — so what’s that other saying? If you can’t become ‘em, buy ‘em? Something like that.
On Friday, Dec. 5, Sarandos, now co-CEO at the uber-popular streaming service dropped a mega-bombshell: Netflix is acquiring Warner Bros. (but not the “Discovery” of Warner Bros. Discovery) for about $83 billion. There are a whole lot of major assets headed Sarandos’ (and his co-CEO Greg Peters’) way — the iconic Warner Bros. studio and its Hollywood lot, DC, and so on. Also packed in the deal? HBO (and HBO Max).
Christmas morning has come early for the Catholic Sarandos. The guy with the most TV just became the guy with the best TV — so what does he plan to do with it? You know, beyond popping champagne and settling in for a True Detective rewatch? (The good seasons, at least.)
Netflix’s plans for HBO remain a bit unclear. In this morning’s press release announcing the news, Netflix called HBO and HBO Max “a compelling, complementary offering” (to Netflix) for viewers.
“By adding the deep film and TV libraries and HBO and HBO Max programming, Netflix members will have even more high-quality titles from which to choose,” the media release further reads.
Well, that sure sounds like Sarandos and Peters plan to combine Netflix and HBO Max — to some degree. Adding some library content is one thing, but then specifying “and HBO and HBO Max programming,” which indicates current programming (why else would you say it that way?) is another.
On a conference call following the revelation of the blockbuster deal, Sarandos said the “plan” is “to continue to operate the iconic Warner Brothers Motion Picture and Television Studios, including HBO … largely as [they are].”
So, obviously, HBO is not going away — you’d have to be a madman to think it would — and maybe won’t even be micromanaged by the micromanagers at Netflix. Sarandos’ old content rival, Casey Bloys, has done a terrific job balancing the “prestige TV” label he inherited (that refers to HBO’s linear programming) with new HBO Max fare, which is arguably more compatible with the existing Netflix library and audience.
Just about two weeks ago, when it looked like Paramount Skydance would be the company to acquire Warner Bros. (with or without the Discovery), The Hollywood Reporter asked Bloys if he was concerned about job security.
“I had a town hall a couple weeks ago, and I said, ‘The only thing you can do in this process, and the best thing you can do, is just focus on your job, which is making the most impactful programming in whatever genre,’” Bloys responded, referring to a then-theoretical takeover.
“It’s kind of a waste of energy, because I don’t know what’s going to happen,” Bloys added.
“Now, that being said, I’m obviously very proud of what we’ve done at HBO and HBO Max. I would like to see that continue,” Bloys said. “We’ve all worked at HBO for a long time. I’m proud of our track record, but you have to go into these processes with an open mind. And a lot of it is out of our hands.”
Well, we know now what is going to happen, and the future is still out of Bloys’ hands. For now — Netflix would be wise to retain Bloys, and even consider making him co-chief content officer with Bela Bajaria. A tag-team with championship potential if we’ve ever seen one.
For now, Netflix execs are touting HBO/HBO Max’s “large and loyal audience,” which as Peters acknowledged, has a “high overlap” of subscribers with his own streamer. That’s not exactly a good thing in terms of acquiring for scale. But that’s not the point here.
“The HBO brand, the HBO service — they’re clearly valued,” Peters said.
Peters, however, offered few (read: none) specifics about how he and Sarandos would operate the competitive streamers-turned-allies. Well, they’ll still be more like frenemies, probably.
The acquisition “gives us a lot of options to figure out,” Peters said, like, “How do you package things in different ways to make sure that we’re maximizing the value for consumers and maximizing the value of the assets that we’re then being able to present?”
It sounds like a starting point would be an HBO Max-Netflix (discounted) bundle. That sort of already exists: Verizon offers a “Netflix & HBO Max (With Ads) perk” for $10/month on eligible mobile/internet plans, combining Netflix’s Standard with Ads tier and HBO Max’s Basic with Ads membership option.
“Some of these bundles and models, if you construct them correctly, have all sorts of benefits — retention benefits, engagement benefits as well — but there’s also a lot of value in the flip side of this,” Peters said. “So you can think about the many, many Netflix members around the world who are not currently HBO Max subscribers, and are not getting any value from the HBO Max titles [and] Warner Bros. titles. There’s a real opportunity, we think, of actually figuring out, how do we bring more of those titles in the right way, through some combination of plans and tiering, etc., to unlock the value in those assets?”
