- Netflix has agreed to buy Warner Bros. in one of the biggest deals in Hollywood's history.
- Government regulators must decide whether Netflix would be too powerful with key WBD assets.
- The key question: Who does Netflix actually compete with?
Would buying Warner Bros. give Netflix too much power?
The streaming giant is telling regulators it won't, and antitrust experts say the answer ultimately depends on how you define who Netflix competes with.
Does Netflix compete with only paid streaming services, a market where it dominates? What about the TV dinosaurs it disrupted, or the social video services nipping at its heels? Could sleep even be a competitor, as its cofounder Reed Hastings famously suggested?
Rival suitor Paramount Skydance has slammed the Netflix-Warner Bros. mega-deal as anticompetitive, arguing that it would harm consumers and Hollywood talent. Netflix is by far the largest paid subscription video streamer, and it would become even stronger with the addition of WBD's studio assets, including HBO and the Warner Bros. library (stocked with fare like Harry Potter and DC Comics).
Netflix, for its part, is advocating for a definition that considers total US TV viewing time. The streamer, which has expressed confidence in its regulatory case, pointed to this in a letter to its employees on Monday.
"Even after combining with Warner Bros., our view share would only move from 8% to 9% in the US — still well behind YouTube (13%) and a potential Paramount/WBD combination (14%)," Netflix's co-CEOs wrote on Monday, citing Nielsen data. A Netflix spokesperson referred to those remarks when asked for comment.
Convincing antitrust regulators of that could be an uphill battle.
"Antitrust regulators are likely to define the relevant market narrowly," said Anthony Palomba, a business professor at the University of Virginia. "The FTC and DOJ have consistently treated streaming as a discrete competitive arena, separate from linear television, theatrical distribution, or social video platforms."
Then there's the Trump factor.
The president has said the Netflix-Warner Bros. deal "could be a problem."
"They have a very big market share, and when they have Warner Brothers, you know, that share goes up a lot," he said.
Reuben Miller, the head of antitrust at financial data service Dealreporter, said Netflix's bid would "be challenged and litigated unless Netflix can convince Trump to come down on their side."
Here's how regulators could determine Netflix's competitive market and, by extension, the future of the media business.
A Netflix-Warner Bros. marriage would dominate paid streaming revenue
A Netflix-Warner Bros. combination would be a colossus. Netflix and HBO Max have accounted for 39% of paid subscription streaming revenue in 2025, per S&P Global Market Intelligence.
Any firm with 30% to 40% market share has historically drawn scrutiny from the US government. If regulators see paid streamers as a distinct market, Netflix's Warner Bros. deal could be in trouble.
Consumers may not view social media apps — even when they are watched on a TV screen — as close substitutes for Netflix, Disney+, or Hulu, Palomba said. If so, a Netflix-HBO Max combination could limit choice or lead to price hikes.
There are few recent parallels to Netflix's Warner Bros. acquisition, Dealreporter's Miller said. One could be Charter Communications, which was allowed to expand its cable operation in 2016, but streamers were in their early days then. Miller said it felt like the government was protecting the nascent streaming industry. However, consumer behavior has changed so dramatically since then that he's unsure if those market definitions would be applicable.
"The incentive is to start with the assumption that a merger is illegal," Miller added. "They're going to start with as narrow a definition as possible, so they'll probably start with paid streaming. And then the onus is on Netflix to try and get them to expand that market definition."
If paid and free streaming are competitors, Netflix's case looks better
Although Netflix is easily the most viewed paid streamer in the US, it's not the top streamer on TV screens.
That would be free YouTube, whose viewership share has soared relative to Netflix in recent years. At the end of 2022, Netflix and YouTube each commanded 7.5% of viewership on US TVs. But as of October, YouTube commanded a 12.9% share while Netflix took second place at 8%, according to Nielsen.
Along with its paid peers, Netflix is also battling free streamers like The Roku Channel and Fox's Tubi that are popular among Gen Z.
When adding free streamers into the marketplace, Netflix and HBO Max together accounted for just over a fifth of US streaming minutes in October, MoffettNathanson analyst Robert Fishman wrote on Monday. While 20% share is powerhouse status, it might not be a dealbreaker from an antitrust perspective.
In the total TV market, Netflix and Warner Bros. combined would still be small
Netflix has argued that it's competing against all of traditional TV, not just streamers.
Its viewership share ranks sixth among TV media distributors, versus its second-place spot in streaming. When measured against cable and broadcast TV, Netflix's 8% share in October was slightly behind the 8.2% share for Paramount, which includes its cable channels and CBS.
And since Netflix isn't trying to buy Warner Bros. Discovery's cable networks like CNN, it could argue that it's only adding a fraction of the media conglomerate's viewership time.
Industry insiders and analysts doubt social media will count as competition
Netflix would undoubtedly love a broad definition of its competitive market that includes TikTok, Instagram, and even video podcasts and video games, which are also spaces where the streamer competes.
Some media insiders see an ultra-broad competitive landscape as a bridge too far.
"My clients are not pitching shows to YouTube," a TV agent said.
Corey Martin of LA-based law firm Granderson Des Rochers said that "to compare Netflix to YouTube, or even TikTok, is like comparing apples and oranges," as are video game companies.
Consumers tend to think of paid streamers like Netflix or Disney+ when they want to watch movies, TV, or sports, Martin said, but "they don't necessarily think about YouTube or TikTok."
"Directly, it's hard to say that a video game is competing with a movie, or a video game is competing with the TV, even though they do consume our attention," said Rahul Telang, a business professor at Carnegie Mellon University.
However, some see truth in the idea of an all-consuming battle for attention.
Bernstein analyst Laurent Yoon said Netflix may be a leader in long-form video, but others have better sports offerings. Yoon also wrote in a mid-December note that attention has shifted to short-form video on Instagram and TikTok, and even new micro dramas.
"Critics may claim these are apples and oranges, but we heard the same argument about linear vs. streaming only a decade ago," Yoon wrote.
