Netflix has three huge new problems with its Warner Bros takeover: Paramount, TikTok and Trump

The changing habits of the TikTok generation pose the same sort of threat to Netflix as it did to traditional broadcasters — and that was before Trump and Paramount threw spanners into the works, writes James Moore

Netflix-Warner Bros is the media merger of the century, so naturally, Donald Trump is sticking his oar in. This was always going to happen. Showbiz, baby!

Tinseltown is positively horrified at the streaming giant’s plan to shell out $72bn (£54bn) for its troubled rival, which has had more owners than an ageing Ford Fiesta, and more engine troubles too.

It’s a monster that will kill us all. It creates a bigger and badder beast than anything thrown at us in the latest season of one of Netflix’s biggest hits, Stranger Things.

It might well raise a wry smile to see liberal Hollywood (quietly) cheering Trump on if he does decide to put the boot in.

There are good, solid competitive reasons for the president to do just that, because this would create a monster. Netflix has 300m subscribers, while Warner’s HBO Max, has roughly 125m. There will be some crossover between them but let’s assume 400m post-deal, for argument’s sake. That’s nearly as big as the next two, Amazon (220m) and Disney (nearly 200m), combined.

However, the truth of the matter is that the deal is motivated as much by fear as it is Netflix’s desire to create an unstoppable media and entertainment supertanker.

This is a defensive deal because, just as Netflix revolutionised the viewing habits of the Millennials, and Gen X while we’re at it, so is it looking nervously at the Zoomers and Gen Alpha rapidly coming up behind them, and especially their fondness for TikTok and YouTube which are largely ad funded (although you can pay for YouTube if you want to) and thus free.

‘Netflix’s controlling brains will be only too well aware of just how quickly the media marketplace can change, not least because of the changes they themselves are responsible for’ (The Independent/Getty Images/UnSplash)

Netflix helped to make scheduled TV an irrelevance to digital natives but also to a good chunk of us who remember when Atari was something more than a quaint antique you might now show your kids at Comicon. Subscription-based streamers could be next on the block.

You wouldn’t think Netflix had too much to worry about given those numbers, but there have been signs of slowing growth, especially domestically, which is still where analysts look first, partly because that’s where the company boasts its highest revenue per user.

This has led to strategies such as the campaign against password sharing, increasing the price of subscriptions and the launch of an ad-funded tier.

Netflix’s controlling brains will be only too well aware of just how quickly the media marketplace can change, not least because of the changes they themselves are responsible for.

The company still produces a wealth of new content, with new shows emerging every day, some of which are even worth paying for. Its relative lack of franchises has forced it to be creative. But does all the new content appeal to younger generations with short attention spans and a yen for free stuff?

What do you do when you are faced with a combination of slowing growth and new threats? You join forces with rivals. You get bigger, cut costs, and protect what you have while the smaller fry fall by the wayside. It is for much the same reasons that Paramount is attempting to spoil the party with a hostile counter-bid.

As an example from the UK, Sainsbury’s attempted to join forces with Asda and build a retail King Kong (another Warner franchise) by sewing together the number two and three grocers. Both were struggling to grow while battling new entrants Aldi & Lidl, who have very different business models and considerable appeal to their customers. Don’t think of the monster we’re creating now, they told competition watchdogs, think of a future in which Aldi and Lidl get much bigger. Ocado too. We’re scared! Let us keep what we have!

They failed and that merger was blocked, because those watchdogs decided it was just too big. Trump may well be on the right track when he says the same things about Netflix-Warner. But what if you include YouTube and TikTok in your analysis? Then it looks rather different.

Time for Reed Hastings and Ted Sarandos to take the president out for a fancy dinner armed with that same message. And to argue that they’re running an all-American success story. By the way, you’re doing a fabulous job as president. And we’re not as woke as Disney. Go MAGA!

Well, it’s worked before.