In early December, Netflix announced plans to acquire Warner Bros. from Warner Bros. Discovery Inc. for a staggering US$72 billion. This extensive deal encompasses Warner’s film and television studios, including HBO Max and HBO, effectively giving Netflix access to a vast library of acclaimed titles such as Game of Thrones and The Sopranos.
Impact on Canadian Streaming Services
Currently, HBO content in Canada is exclusively licensed to Bell Media’s Crave streaming platform. If the acquisition proceeds, HBO’s offerings would become available to Netflix subscribers, significantly enhancing Netflix’s presence in the Canadian market while posing a serious threat to Crave’s viability.
Market Dynamics
- Netflix boasts approximately nine million subscribers in Canada.
- Crave, in contrast, has around 4.3 million subscribers.
While the number of shared subscribers between both services remains unclear, many Canadians turn to Crave primarily for HBO content. Should the deal receive approval from the U.S. Department of Justice (DOJ), Crave faces the possibility of a substantial loss in its subscriber base.
Regulatory Considerations
The DOJ’s review will center on whether Netflix’s acquisition could lead to monopolistic practices within the streaming industry. Currently, Netflix leads globally in subscribers, while HBO Max ranks among the top five services. Following the acquisition, Netflix’s market share could exceed 30%, outpacing competitors such as Amazon Prime Video and Disney+.
For Canada, it is critical that the Competition Bureau intervenes. They should require Netflix to divest HBO assets to a Canadian entity to maintain competition in the market. Without such action, Crave could suffer a significant setback, diminishing its ability to compete effectively.
Potential Outcomes for Crave
Anticipating the collapse of Crave, the shifting landscape could lead to mass subscriber migration to Netflix, jeopardizing Crave’s existence. Bell Media has already extended its partnership with Warner Bros. Discover in 2024, which could leave Crave with a substantial content deficit.
- Crave relies heavily on HBO titles to attract and retain subscribers.
- Other Canadian content lacks the same level of recognition and appeal.
Conclusion
As the potential acquisition of Warner Bros. by Netflix looms, Canada must prepare for the impact on its streaming ecosystem. If approved, it is essential for regulatory bodies to ensure Netflix does not eliminate competition. While individual consumers may pay higher subscription fees in the short term, preserving a competitive environment is necessary for fostering Canadian talent and content creation in the long run.
