After Paramount Skydance proposed a higher $31 per share than Netflix’s $27.75 per share price, Netflix withdrew from the bidding war to acquire Warner Bros. Discovery’s studio and streaming assets in February 2026. For the current arrangement, WBD would have been due $2.8 billion in breakup fees from Netflix; Paramount has agreed to pay this amount.
Instead of focusing on expanding its content library through mergers, Netflix plans to double its ads revenue in 2026 to $3 billion, up from $1.5 billion in 2025. The company sees advertising as a key driver of future growth, not content acquisition.
A basic reevaluation of the value creation process by streaming platforms is exposed by the strategy shift. The old paradigm assumed that content ownership was the primary driver of subscriber acquisition, which in turn generated subscription revenue.
The new model accounts for the fact that advertising monetization can quickly increase income per user while lowering the barrier to entry with a cheaper ad-supported tier, thereby accelerating subscriber acquisition. More than 60% of new subscribers in regions where the plan is available choose the ad-supported tier, showing that budget-conscious viewers would rather pay for a subsidized subscription than pay for a premium ad-free one.
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