HBO’s Potential Netflix Deal Isn’t So Shocking — but It Is Significant
Is it really so surprising that Warner Bros. Discovery would license HBO shows to Netflix?
Yes, this would have been unthinkable a few years ago. Yes, the two companies’ rivalry is well documented. But as the past year has proved, WBD CEO David Zaslav will do almost anything short of a memorabilia auction to generate cash to pay down the company’s massive debt load, and he’s perfectly willing to pivot away from what was once conventional streaming business wisdom in the process.
The news that WBD is in talks with Netflix to loan out HBO titles is totally in keeping with this pattern, though it does epitomize how profoundly the direct-to-consumer game has changed in just over a year. The walled gardens that once defined the streaming wars are starting to crumble as the legacy media players strive to turn their services profitable by any means necessary, including renewed content licensing.
WBD has led this charge, pulling dozens of titles from HBO Max to loan out to FAST platforms instead. By the same token, where HBO’s catalog was supposed to be the crown jewel of WBD’s flagship streaming offering (even as the company sheared “HBO” from that service’s moniker), it’s now just another tool in Zaslav’s ongoing quest to squeeze as much free cash flow as possible out of WBD assets.
There are still limits, however. By the reported terms of the prospective Netflix deal (which has not been finalized), licensed HBO titles will not be current programming such as “House of the Dragon” or “The Last of Us” but concluded series. The Issa Rae comedy “Insecure,” which wrapped in 2021, is one title reportedly under discussion. (Representatives for Netflix and HBO both declined to comment.)
It’s not so different from the pact HBO struck to license shows to Amazon Prime Video back in the halcyon days of 2014. That deal featured such marquee legacy titles as “The Sopranos” and “The Wire,” as well as some then-current series including “Girls” and “Veep,” but kept “Game of Thrones” exclusive to HBO. (Let’s not forget the edited reruns of “Sex and the City,” “The Sopranos” and more that once ran on basic cable, either.)
And as shameless as Zaslav has been, it’s still extremely unlikely he’ll loan out, say, the recently concluded “Succession” or even “Thrones” — the HBO content, in other words, most likely to lure new subscribers to Max. This is presumably just another way to monetize content sitting around that streaming library, if not gathering dust then certainly not gathering much revenue.
Still, there’s a difference between loaning HBO content to a FAST service and loaning it to WBD’s number one rival in the streaming wars, isn’t there? It’s true the maneuver does seem to signal a power shift, an implicit admission that WBD can’t really compete with Netflix after all — at least, not in its current financial shape. Robbing Max to pay David, so to speak, is the only solution for the moment.
It also portends where Netflix may be headed. The market, we’re learning, seems able to support only a few major streaming services at the scale required to turn a profit, and Netflix — for all the hay made of its troubles last year — seems destined to be one of those services.
It’s very possible, as we’ve argued previously, that Netflix will once again become a repository for the traditional studios’ content in the future, as those companies backpedal from the “all in on the streaming model” in favor of diversified revenue streams. In other words, this may be far from the last eyebrow-raising licensing deal we see Netflix strike so long as the studios continue their streaming war of attrition.
