The streaming wars are over—and Netflix won. You can see that in Netflix’s fourth quarter earnings report, which was released on Tuesday and showed the streaming service added 13 million subscribers in the most recent quarter, while earning more than $5 billion in 2023. (That report sent Netflix’s stock up more than 10% on Wednesday to $544.87.) And we got another, less obvious, sign this week of Netflix’s dominance when news broke that it will be licensing Sex and the City, one of HBO’s most iconic series, from Warner Bros. Discovery, owner of Max, which is supposedly one of Netflix’s most important competitors.
The Sex and the City deal is the latest in a series of recent licensing deals that have given Netflix access to some of its competitors’ most popular properties. If you want to see DC movies like The Dark Knight, or The Batman, or Aquaman, or HBO series like Band of Brothers and Ballers, you no longer need to subscribe to Max. You just need to add them to your Netflix queue.
This is a major shift from the business model that prevailed just a couple of years ago, when the companies that were building out streaming platforms like Max and Disney+ to compete with Netflix saw exclusive content as one of the only ways to distinguish themselves. As Disney CEO Bob Iger put in 2022, licensing your best properties to a competitor would be like “selling nuclear weapons technology to a Third World country,” and then watching them use it against you. So if you wanted to watch most HBO content, or Dune, or the DC films, you had to subscribe to Max (or, as it was called until last year, HBO Max), just like if you wanted Star Wars, or Pixar or MCU content, you had to subscribe to Disney+.
That, though, was back in the days when a company like Max still entertained thoughts that it might someday topple Netflix at the top of the streaming pyramid, and when Wall Street was giving streaming services more leash in terms of how much money they could lose. Over the past year or so, both of those things have radically changed. Media companies are now under far more pressure to show that they’re making money (or at least losing less money), rather than just adding subscribers. And Netflix—the one streaming company that’s inarguably profitable—has cemented its hold on streaming.
The result has been that many of Netflix’s competitors—including, most notably, Max, but also Paramount (which owns Paramount+), NBCUniversal (which owns Peacock), and even, in some limited cases, Disney—have decided that the best strategy now is licensing their content to the biggest player in the industry.
The decision to license is understandable. The profit margins on licensing are high, since the content has already been made, so these deals immediately boost a company’s bottom line. Licensing also increases the number of people who can see your content, which is a good thing for content creators, and, in theory, could help fuel demand for future products. As Warner Bros. Discovery CEO David Zaslav told analysts back in August, in perfect business-school speak, “We’re expanding our audience while maximizing the value of assets and providing more revenue streams.”
The problem is that while it’s true that licensing content to Netflix will boost revenue and profits in the short- and even medium-term, it’s also true that giving Netflix access to your content makes Netflix more appealing to users, helping it increase its subscriber base and reduce churn. And it makes your own streaming service less appealing, by making it less exclusive. So it almost certainly reduces the value of your streaming service in the long term.
That doesn’t mean these licensing deals are necessarily a mistake. But it does mean they are effectively a concession of defeat, a statement by companies like Max that there’s no hope of beating Netflix, so the smart thing to do is to, in some sense, join them. It’s not a coincidence that, after all, that licensing only goes in one direction: other streamers are selling their content to Netflix, while Netflix sells none of its content to anyone else.
To be sure, it’s not like streamers are licensing everything—you still need Max if you want to watch Succession or The White Lotus. And Disney, for its part, is still smartly keeping its most valuable properties to itself. But the overarching message these deals are sending is undeniable: It’s Netflix’s world. Everyone else just lives in it.