Netflix, WBD, and Attention
What text and audio tell us about video's future
The discourse around the bidding war to acquire Warner Bros. Discovery is wrong. Having worked at WBD, I think many underestimate Netflix’s technological advantage and misunderstand who Netflix is actually competing against. This is all part of a broader shift in video being disrupted by technology.
Ben Thompson has some great analysis in his Dec 8 piece that I will be referencing heavily. He describes the changes that have happened in text and audio media that have already passed: an existing business model pre-tech, a period of transition as tech was able to disrupt, and a new equilibrium. To understand where video is going, we need to see where text and audio already went.
Comparing the changes to text, audio, and video
Text
Pre-1990s and early 2000s, the status quo was both aggregated and distributed regionally: local newspapers (maybe multiple) monopolized coverage on local sports teams and affairs, while national newspapers covered major stories.
Then, as technology became able to disrupt this business model, an awkward transition period appeared (2005-2015s). The NYTimes was struggling from being attacked on both ends, social media became prevalent, and new business models online like direct-to-consumer and ads became possible.
Now, a new equilibrium is present. Large aggregators like the NYTimes are a default source and subscription (for those who distrust social media for reporting in particular). Other niche publications like the Wall Street Journal and Financial Times have also rebounded. Ironically, traditional media companies became disruptors themselves, powered by cheaper distribution through technology, against smaller players.
On the long-tail side of market hyper-specific and more individualized sources have exploded to fill the void. Stratechery itself is a great example: Ben Thompson provides top shelf industry level analysis for a reasonable price. This is way easier to access as an individual instead of businesses compared to the past. Billy’s BBQ is another gem: Billy writes about Arsenal (London soccer team) with extreme detail, referencing annotated images and GIFs from matches, his own custom stats models during transfer windows, and player profiles. The quality of this writing probably far exceeds historical London Times sports columnists, and Billy’s work is free. I likely wouldn’t have even had access to anything like this 10 years ago, let alone 25. This exists for many teams and sports across the world. Here’s the counterintuitive part: the NYTimes is as responsible for killing local newspapers and smaller writers as platforms like X or Substack. The big aggregators didn’t just survive disruption - they became disruptors themselves, using cheaper digital distribution to squeeze out the middle.1
Text is the least information heavy medium to transmit on the internet. It makes sense that disruption happened to text ahead of audio and video. However, audio was not far behind...
Audio & Music
Music did not end up in a barbelled state like text media. Previously, radio acted as a main aggregator, TV channels as secondary aggregators, with physical distribution also acting as a growth channel.
Now, a few large aggregators like Spotify offer similar access via subscriptions. Direct to consumer platforms like Bandcamp haven’t gained mainstream adoption, as consumers prefer the newfound convenience of the aggregators. The hyper-specific end of the text barbell hasn’t formed for audio yet.
A way to understand this is through ‘consumption units.’ A news article is a discrete object that you somehow find, read, and finish. I don’t know many people who binge read articles 😅 (if you do you’re probably already a Stratechery sub). A song is a few minutes, but listening is not discrete. One doesn’t consume one song and often stop. People consume in continuous flows: playlists, albums, radio-style streams, background audio while working. The unit of consumption is the session, not track. This makes the aggregator necessary infrastructure for people’s listening habits, and is a big reason why every aggregator has roughly the same catalog due to licensing requirements. The moat are your playlists, your listening history, and algorithmic profile.
This is why music didn’t barbell the way text did: the consumption pattern itself--continuous, passive, session based--makes aggregation necessary. Reading requires active selection; you find an article, read it, and finish it. Listening is often the opposite. Most people prefer decisions about what to play next to be made for them. The direct creator-to-listener model works fine for merch, live performances, and some Patreon memberships, but not for the primary listening experience.
Once networks covered enough of the world and bandwidth was high enough for satisfactory listening, streaming services began to take off. This is a similar story for film and TV.
Film & TV
The Film and TV industry is currently in a huge state of flux. Netflix attempting to buy WBD is a big sign of the times.
Netflix has reaped the rewards of a massive technological advantage compared to most of the Hollywood incumbents over time, and hardly competes with the rest of the industry (HBOMax, Paramount+, Peacock, etc.). When I worked at WBD, we felt that Netflix was so far ahead they were bored.2 Traditional studios spent years reaching basic streaming competence. Table-stakes features like global availability, basic personalization, performant streaming were priorities before they could even begin competing on Netflix’s terms.
Owning Content vs. Leasing Content
But Netflix has a problem. Netflix is able to build audiences for content it does not own. Ben Thompson highlighted three examples:
Drive to Survive: Netflix made Formula 1 popular in America, but does not own live race rights, where most of the money is. It built demand for a product someone else sells.
Suits: licensed from NBCUniversal for cheap and became more popular on Netflix than during its original run. However, for any continued deals, Comcast will price higher and still owns the IP for any new spinoffs.
K-Pop Demon Hunters: Sony licensed the movie to Netflix, who used their platform to create exponential growth. Sony still owns the IP and will profit off of merchandise and surely charge more for sequels.
Netflix and WBD
What Netflix gains from WBD is coverage across viewing modes: HBO’s prestige catalog for engaged, lean-forward watching (‘tent-pole’ content spikes attention share briefly); HGTV and Food Network for lean-back background viewing that can help prevent churn; Harry Potter and Cartoon Network for kids (an underrated revenue driver, especially for ad-supported tiers); and DC’s game studio for attention-share beyond video, which will pair nicely with their cloud gaming investments.
Netflix is not competing with Hollywood studios. It is competing with YouTube and TikTok. That is to say: the relevant scarce resource is not content. It is attention. Netflix is paying approximately $75 billion for WBD for roughly 1% of total viewing hours... to some, a massive overpay. This is especially expensive when recognizing that YouTube and TikTok own their content through creator relationships. Their economics are fundamentally different. Viewed through this lens, especially since Netflix does not have the distribution channels of a historic Hollywood studio, this should not cause anti-trust concerns or call for the end of Hollywood. I think changes will be slow, taking years to influence content strategy.
Predicted New Equilibrium
On the aggregator end, multiple platforms with different content mixes will survive. Unlike Spotify—where catalog parity forces competition on features and price—video exclusives create genuine differentiation. Netflix, Disney, Peacock, will coexist with different content portfolios. Consumers will choose preferred platforms or stack subscriptions.
A mix of tent-pole content (lean-forward weekly drops of trending IP) will continue to be paired with auxiliary content (lean-back old IP that people re-watch often). I hypothesize that this lean-back style of content (Suits, Friends, etc.) will continue to thrive for the next decade, but begin to decline. This will be because of generational viewing preferences: millennials were conditioned to like older IP and re-watch it, while Gen-Z and younger haven’t been. We’ve been 1) conditioned to not re-watch as often because of slot-machine-like dynamics around content and 2) grew up with passive viewing on YouTube from the start.
Subscription prices will approach cable bundle costs. Content creation is expensive... Hollywood has not become cheaper. It is much more expensive than distribution - whether it be cable or AWS servers. It makes sense that prices will rise to match actual production costs, since that is the primary driver of cost.
On the creator end, premium content distributed on social platforms. YouTube, TikTok, Instagram as venues for creator-made films and premium content, content that increasingly encroaches on ‘lean forward’ viewing habits while still maintaining the ‘lean back’ base. Pricing may take some time to get right... perhaps a few dollars to lease a film, probably with ads. The same content at different price points with varying quality and ad load could also be available. The burgeoning creator end is already happening.
Nail House: RocketJump made low-budget series on YouTube as an early pioneer. Now producing a feature film, Nail House, that will be distributed directly or in theaters. Production was funded in hours through a mega crowdfund that promised behind-the-scenes access and merchandise as value adds. Others use Patreon for similar purposes.
Two Sleepy People: A project from Camp Studios, a Gen-Z creator collective. They secured a theatrical limited release (opening weekend January 22) without entering the festival circuit and without marketing spend. They used their networks and strong production chops to generate enough interest. Straight from production to theaters through direct distribution.
I don’t think these are anomalies - I think they are early signals of a potential video future. Text barbelled because distribution got cheap and consumption stayed discrete. Music didn’t barbell because consumption is continuous and passive. Video is somewhere in between and has space for both: lean-back content will stay aggregated, but lean-forward viewing might fragment the same way text did. They may be the hyper-specific end of the barbell finally growing.
The question I am unsure of is how much of ‘prestige TV’ is actually a consumption pattern that creators can serve directly. I’d bet that in five years, a creator-funded film will outperform a mid-budget studio release-not necessarily because it’s better, but because the creator already owns the audience. When the distribution gets cheap, the advantage shifts to whoever has the direct relationship.
Hollywood thinks it’s competing for content. It’s competing for attention, and it is losing. I'm curious whether others are seeing creator-to-audience models working in other industries… leave a comment!
I wrote more about barbells as a general phenomenon previously. The pattern shows up everywhere from VC fund sizes to travel to health. I keep seeing it and I’m not totally sure if it’s a real structural feature of markets or just a pattern my brain now finds everywhere… maybe both?
I wrote about why I left working in tech in the media industry here
Thoughtful piece on the attention economy framing. The gen-Z rewatching hypothesis is underappreciated--Suits blowing up on Netflix felt like an anomaly to most people, but it's actually revealing a cohort effect that's about to cliff. The interesting tension is between your prediction on creator-funded films and the capital intensity problem. A $200K Patreon-funded indie can work, but can a creator rally $15M for something theatrically viable? The closest analog might be how Chamath took SPACs direct-to-retail, except film has way worse unit economics than software. I'm watching wether the barbell thesis holds or if we get a third equilibrium: micro-budget lean-forward content that's discovered algorithmically but consumed in lean-back sessions. TikTok's trying to thread this needle with their longer-form pushbut it's messy.