Warner Bros. has long been a storied name in Hollywood, yet its legacy has come with a history of complex mergers and acquisitions that often end with the studio back on the market. Past attempts to leverage its assets by companies like AOL and AT&T have floundered, largely because these new owners underestimated the challenges of monetizing such a legacy brand. However, a fresh acquisition by Netflix, valued at $83 billion, could change that narrative, given Netflix’s powerful standing in the entertainment sector. This deal not only underscores Netflix’s meteoric rise from a fledgling tech company to a dominant force in Hollywood but also highlights its ambition to integrate one of the industry’s most iconic studios.

Should regulatory bodies green-light this acquisition, Netflix will gain ownership of Warner Bros.’ extensive assets, excluding those held by Discovery Global. This includes HBO/HBO Max, DC Studios, and Warner Bros.’ television and film production divisions. Consequently, Netflix would become the custodian of major franchises such as Game of Thrones and Harry Potter, significantly expanding its operational scope as a comprehensive studio. Meanwhile, Discovery Global will retain networks like CNN, Discovery Channel, and TLC, and is expected to emerge as a standalone entity by the third quarter of 2026.

This strategic division of assets was clearly on Warner Bros. Discovery’s agenda when it announced plans to revert Warner Bros. and Discovery into separate entities earlier this year. Although CEO David Zaslav had yet to openly entertain acquisition offers at that time, the financial difficulties faced by WBD’s cable networks hinted at a looming sale.

Despite WBD’s efforts to reduce a massive $55 billion debt inherited from Discovery’s acquisition of WarnerMedia, the company’s struggling cable TV sector led to a significant credit rating downgrade earlier this year. This debt, a remnant of the ill-fated AOL-Time Warner merger, has been a persistent shadow throughout Zaslav’s leadership.

Financial woes, unsuccessful rebranding efforts, and rounds of layoffs left Warner Bros. Discovery in a vulnerable position, making a sale to a willing buyer an attractive solution to satisfy shareholders. While such challenges might pose difficulties for Netflix as well, this acquisition presents a different dynamic for several reasons.

Unlike its predecessors, Netflix is not a traditional tech giant or telecom firm but a well-established Hollywood powerhouse. Its acquisition strategy is not merely about absorbing existing IP but also about leveraging its own production capabilities to create new, original content. With hit series like Stranger Things and Squid Game nearing their conclusions, acquiring Warner Bros.’ rich library of films and series makes strategic sense for Netflix. Historically, Netflix has struggled to cultivate its own successful franchises—consider the underwhelming performance of Rebel Moon—but the acquisition of Warner Bros. provides an opportunity to tap into and expand on its extensive collection of beloved franchises.

Though Netflix feels like a better acquisition partner compared to Warner Bros.’ previous owners, this is still a consolidation and these kinds of mergers always come with casualties. And it is likely that we will soon start hearing about layoffs as Netflix begins dealing with internal redundancies created by its absorption of Warner Bros.’ employees and operations. But what is much less clear is how the newly merged studio will go about releasing its new projects.

In 2021 during the covid-19 pandemic’s height, WBD’s decision to debut movies on HBO Max as opposed to theaters prompted directors like Christopher Nolan to denounce the company for becoming “the worst streaming service.” Though box office numbers still haven’t returned to pre-pandemic levels, theaters have reopened, and breakout hits like Warner Bros.’ A Minecraft Movie and Superman features have made it clear that there is a demand to see movies on the big screen. Netflix has experimented with very limited theatrical releases that transparently read as plays to qualify its movies for major industry awards. But it has still primarily been a streaming company in the years since it got out of the DVD game.

Unlike MGM, which was on the decline when Amazon bought it, Warner Bros. has had a very strong track record with its recent theatrical releases. Netflix has said that it “expects” to keep putting Warner Bros.’ movies in theaters, but co-CEO Ted Sarandos has signaled that the company is thinking about shortening its theatrical windows in order 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,” Sarandos said this week in a call with industry analysts.

Netflix has also made abundantly clear that it is open to cutting production costs by using generative AI. The company has not mandated that its collaborators use the technology as part of their production workflows, but it is easy to imagine gen AI becoming a bigger part of the studio now that it has taken on all of the projects Warner Bros. has in development.

The more glaring concern to come out of the new merger is the way that this could impact competition between the major studios and streaming platforms. Netflix has effectively replaced Warner Bros. as one of the Big Five, which will likely change the entertainment industry’s power dynamics. But streaming customers will probably feel these shifts more directly as Netflix and its competitors settle into a new status quo.

Netflix’s prices could go up yet again under the auspice that the service has become more premium with Warner Bros.’ offerings. It’s still not clear how Netflix will handle the HBO / Max brands long term. The company has said that it thinks “HBO and HBO Max also provide a compelling, complementary offering for consumers,” but it would not be surprising to see those brands ultimately going the way of Hulu, which has been turned into a section within Disney Plus.

It has been years since Netflix was a rowdy upstart fighting to be taken seriously. But even though the company has already cemented itself as the world’s biggest TV / movie streamer, this new deal will take it to a different level of prominence. The Netflix / WBD merger will undoubtedly result in changes — some of them bad — that reverberate through the entire entertainment landscape.

But as tumultuous as things will likely feel in the immediate future, it doesn’t seem likely that Netflix will end up trying to sell off Warner Bros. in a couple of years. Acquisitions of this scale aren’t the company’s usual MO, but it has been bullish about wanting Warner Bros. since the studio went on sale. If the deal goes through, Netflix is undoubtedly in the big leagues — now it has to prove it belongs.