Netflix, WBD, and the Myth of the Streaming Monopoly
The proposed acquisition of Warner Bros. Discovery (WBD) assets by Netflix is already being cast as a landmark antitrust “test case.” If past deals are any guide, the critiques will follow a familiar script: narrow market definitions, selective data points, and headline-friendly market-share claims designed to trigger alarm. Yet in a video ecosystem defined by relentless substitution and audience mobility, it is far from clear that this transaction threatens consumers—or creators.
Sen. Mike Lee (R-Utah) recently offered a textbook example of the rhetoric we expect in a letter to the CEOs of Netflix and WBD, writing that:
Netflix’s reported proposed acquisition of WBD’s studios and streaming business raises these concerns. Based on publicly available information, this transaction appears likely to raise serious antitrust issues, including the risk of substantially lessening competition in streaming markets. If consummated, the acquisition could eliminate a major competitor, consolidate control over an extensive content library, and increase bargaining power over creators and talent.
What stands out in this framing is not merely its reliance on abstract rhetoric about “consolidation” and “bargaining power.” The deeper issue is that the theory depends entirely on contested boundary and measurement choices—choices that rival firms have strong incentives to promote. In a sector where viewers routinely substitute among subscription services, ad-supported streaming, social video, and user-generated content, the competitive picture changes dramatically depending on what analysts include and what they leave out.
For that reason, public claims about consolidation, bargaining power, and market share deserve to be treated as advocacy, not analysis. Serious antitrust review must rest on evidence of substitution and competitive effects, not on a rival’s preferred market definition or a metric chosen because it produces a scarier headline. Even well-intentioned merger analysis can misfire when it defines markets too narrowly or discounts competitive constraints that are real, but less obvious ex ante.
As we have noted elsewhere, modern video competition no longer fits neatly into legacy silos such as “broadcast,” “cable,” or “streaming.” Substitution increasingly cuts across formats, devices, and business models, as viewers reallocate attention in ways traditional merger analysis often understates. Services that appear distinct at first glance—YouTube is the canonical example—can impose substantial competitive discipline on legacy media firms, even when a cursory market-definition exercise would place them in separate markets.
At the same time, consumers face rising transaction costs as they try to access video content scattered across a growing number of platforms. Those frictions make further consolidation not just likely, but predictable. As we have observed:
The ability to offer aggregated content packages is virtually essential to reduce consumer frictions, compete successfully for viewers, and therefore to draw (and keep) broad audiences. Obtaining and maintaining sufficient scale is, in turn, crucial to the subscription and advertising revenues required to fund further content creation and operations.
The Netflix–WBD transaction illustrates how market-definition choices often do the real work in antitrust debates. Applying standard economic logic to the information currently available yields a simple conclusion: under a realistic competitive frame—best understood as competition for video attention—the deal appears unlikely to materially lessen competition. Even under a narrower, streaming-only lens, publicly observable evidence does not support a plausible theory of consumer harm ex post. If anything, WBD’s decision to sell its streaming assets suggests the market is already converging on a new equilibrium with fewer, more viable players—an outcome that may ultimately benefit consumers rather than harm them.