Look, I've been in this industry long enough to know when a company is selling you a subscription and when it's selling you a lifestyle makeover disguised as entertainment.

Netflix just reported numbers that would make any Wall Street analyst weep tears of pure EBITDA joy—325 million subscribers, $45 billion in revenue, growth that refuses to quit like that one guy at the startup who keeps pitching during layoffs. "No, seriously, hear me out on this pivot to AI-powered dog food."

And yet. And yet.

Their stock dropped 4% after earnings.

Which, in Netflix math, means roughly $8 billion in market cap evaporated because investors took one look at their $83 billion all-cash offer for Warner Bros. Discovery and collectively said: "I'm sorry, you want to buy what now?"

Here's what's actually happening in Reed Hastings' kingdom—except it's not Reed's kingdom anymore. Ted Sarandos and Greg Peters run the show now. Reed's off funding education initiatives and presumably playing extremely competitive board games with other billionaires. ("I'll trade you Boardwalk for charter school funding." "Deal.")

Bless him. Genuinely. The man built a DVD-by-mail service into a company worth more than most countries' GDP, got bored, and left to pursue his passions. That's the dream. That's the actual California dream, not the one about owning a home. (Ha. Homes. Remember those?)

But Ted and Greg? They're not trying to win streaming anymore. That war's basically over. Netflix won. Disney's still pretending they're fine, Amazon's subsidizing Prime Video with the tears of warehouse workers, and everyone else is either merging, selling, or hoping a bigger fish eats them before the money runs out.

No, Netflix has a new mission now: become television itself.

Not a streaming service. Not a tech company that happens to make shows. Television. The whole thing. The infrastructure. The default. The thing your parents mean when they say "I saw it on TV" even though they haven't touched an actual television broadcast since Obama was president.

And they've got $83 billion in cash to prove they mean it.

That's the price tag on Warner Bros. Discovery's studios and HBO Max. Not the whole company, mind you—Netflix isn't stupid enough to want WBD's linear TV networks, which are declining faster than my faith in humanity during an election year. They want the good stuff: HBO, the film studios, DC Comics, Harry Potter, Game of Thrones.

You know. Just the most valuable intellectual property in entertainment history. No big deal. Casual Tuesday acquisition.

The fact that Paramount-Skydance is also trying to buy WBD has turned this into the most expensive game of "actually, I called dibs first" since two tech billionaires fought over Twitter. (We don't talk about that anymore. It's too sad.)

Netflix's response to Paramount raising concerns? They switched their offer to all-cash. Which is the corporate equivalent of showing up to a poker game, dumping a duffel bag of money on the table, and saying "Call."

Let's do the highlight reel, because Netflix is very good at highlight reels:

Full year 2025: 325 million subscribers worldwide. Up from 301 million. That's an 8% uptick, which sounds great until you remember it was 16% the year before. Math is fun.

Revenue: $45 billion total. Up 16% year-over-year. Okay, that's actually impressive. They matched 2024's revenue growth while subscriber growth got cut in half. ARPU expansion doing heavy lifting.

Q4 specifically: Revenue grew 19%. Fastest quarter in four and a half years. Net income up nearly 30%. The money machine goes brrrr.

Ad revenue: $1.5 billion. First time they've disclosed an actual dollar amount instead of vague percentage increases and carefully worded "momentum" language.

See? Good numbers. Great numbers, even. The kind of numbers that make you want to buy a boat and name it "Recurring Revenue."

But here's where it gets spicy.

That $1.5 billion in ad revenue? Sounds huge until you realize they have 325 million subscribers and the ad tier is available in a dozen countries. That's... not great monetization. They're literally making more money per member on the ad-free tier. Which kind of defeats the purpose of having an ad tier, unless the purpose is "get people in the door cheap and hope they upgrade eventually."

Subscriber growth dropping from 16% to 8%? That trajectory points to mid-single digits real fast. And guess what Netflix stopped doing this year? Reporting subscriber numbers quarterly. Disney's about to do the same thing. When multiple companies stop telling you a number at the same time, that number is about to get embarrassing.

The WBD acquisition timeline? 12-18 months minimum. During which Netflix's stock will probably continue its current hobby of "making investors nervous." They've already lost nearly a third of their market value since October when they started circling Warner Bros. like a very wealthy shark.

And that "approaching 1 billion viewers" claim? That's counting everyone in every household that watches. Which is like saying I have "approaching 1,000 friends" because I count everyone who's ever liked my LinkedIn posts. Technically defensible. Spiritually fraudulent.

Let me be clear: I genuinely don't know which one it is. Nobody does. That's what makes it interesting.

The bull case: Netflix absorbs the most prestigious content brand in television (HBO), locks up generational IP franchises (Harry Potter alone is basically a money printer), eliminates a major streaming competitor, and gains a fully built-out ad sales team with thousands of experienced sellers. It's a fast-forward button on about five years of organic growth.

The bear case: They're massively overpaying for a company that's "changed hands quite a few times" and, quote, "hasn't always gone smoothly." Warner Bros. Discovery is a company of declining value that multiple owners have failed to turn around. Netflix's core business is humming along fine—why risk it on an $83 billion bet that could take years to integrate?

The truth is probably somewhere in the middle, which means it'll be wildly unpopular with people who have strong opinions on the internet. (So, everyone.)

Here's my read: Netflix isn't buying Warner Bros. for the library. They're buying it to kill HBO Max as an independent competitor.

Yes, the Harry Potter rights are nice. Yes, having Game of Thrones in your catalog is cool. But the real strategic value is removing the one streaming service that consistently beats Netflix at prestige television. When people talk about "the best shows on TV," they're usually talking about HBO. That drives Netflix executives insane.

Buying WBD doesn't just give Netflix HBO's content—it removes HBO as a competitor. Forever. That's the moat. That's the whole play.

Whether it's worth $83 billion is a different question. But I promise you, somewhere in a Netflix conference room, a slide deck exists that says "Competitive Threat Neutralization" in 48-point font. Guaranteed.

While Netflix plots its media empire expansion, the competitive landscape is doing whatever the opposite of "thriving" is.

YouTube has 2.7 billion users and is basically unkillable. They own daytime viewing—podcasts, short-form, creator content. Netflix owns nighttime viewing—premium shows, theatrical films, the stuff you watch lying in bed at 10pm pretending you're going to sleep soon.

A smart analyst I talked to put it perfectly: "YouTube owns the day. Netflix owns the night." Different markets. Different consumption patterns. But they're increasingly competing for the same advertising budgets, which is where it gets interesting.

Disney is still figuring out how to make streaming profitable, which is corporate-speak for "we are bleeding money and would like to stop doing that." They've got great IP but can't seem to decide if they're a legacy media company or a tech company or a theme park operator that occasionally makes content.

Amazon treats Prime Video like a loss leader for toilet paper subscriptions and AWS upsells. They're fine. They'll always be fine. They could lose money on streaming forever and still be worth more than God.

Everyone else is either merging, selling, or quietly hoping to get acquired before the music stops. Paramount's trying to buy WBD while simultaneously trying not to be bought by someone else. It's very confusing. I'm sure it makes sense to someone.

Here's what I think is actually the most interesting story buried in Netflix's earnings: the ad business.

$1.5 billion in 2025. Expecting to double to $3 billion in 2026. That's genuinely impressive growth.

But it's also a massive tell about Netflix's future.

See, subscription growth is slowing. Everyone knows it. Netflix knows it. That's why they stopped reporting quarterly numbers. But ad revenue can scale independently of subscriber count. If they can get ad-tier users to watch more, fill more of their available inventory, and improve targeting... that's a completely separate growth vector that doesn't require them to find new subscribers in a saturated market.

The catch? Ad-tier users apparently aren't watching that much. The monetization per user is low. The viewing time isn't there. Netflix has high CPMs but low fill rates—meaning advertisers want to buy, but there aren't enough eyeballs to sell.

Which brings us to live sports. Live events. The kind of programming that generates massive, predictable audiences all at once. The NFL games, the boxing matches, the whatever-Jake-Paul-is-doing-now spectacles.

Netflix has been testing these. They'll do more. Not because they particularly love sports, but because sports are the one thing that makes people show up live, in huge numbers, at the same time. That's catnip for advertisers.

Buried in some of the analyst coverage is a detail that should terrify every other advertising platform: Netflix is planning to roll out AI-powered ad optimization by 2026.

This isn't "we'll show you ads for things you've bought before" like Amazon. This is "we know what you watch when you're sad, tired, anxious, or nostalgic, and we're going to serve you ads that match your emotional state."

Netflix has years of behavioral data. Billions of hours of viewing patterns. They know when you binge. They know what you watch at 2am versus 2pm. They know the difference between "I'm choosing to watch this" and "this autoplayed and I didn't stop it."

Now imagine that data powering an ad platform.

Contextual, intent-based, emotionally-targeted advertising at streaming scale. Not interruptive. Engineered. Ads that feel like they belong in the moment because an AI calibrated them to your current psychological state.

That's not advertising. That's inception.

Over the next four parts (subscribe to AdoTAT+ to read them, shameless plug, you're welcome), we're going to dig into:

Part 2: The Warner Bros. Gambit — Will this deal actually close? What happens if Paramount outbids them? What's Plan B if regulators block it? And why is the Trump administration suddenly interested in streaming mergers?

Part 3: The Ad Revenue Reality — Is $1.5 billion impressive or embarrassing? What does Netflix need to hit $3 billion? And when does Wall Street start valuing them as a hybrid media/ad company instead of a pure subscription business?

Part 4: The Subscriber Slowdown — Why did they stop reporting quarterly numbers? Should they launch a free tier? And how worried should they actually be about YouTube?

Part 5: The Games, The Bets, and The Endgame — Does Netflix gaming matter or is it the next Meta metaverse? What's the actual bull and bear case for the next five years? And at what point does the disruptor become the disrupted?

Netflix in 2026 is a company at an inflection point.

They've won streaming. That war's over. The question now is: what do you do when you've won? Do you defend your position? Do you expand into adjacent markets? Do you spend $83 billion trying to buy your biggest competitor's content library?

Apparently, you do all three at once and hope the stock market doesn't punish you too badly.

The honest answer is that nobody…not Netflix executives, not Wall Street analysts, not media reporters, certainly not me, knows if this strategy will work. It's either the most ambitious media play since... I don't know, maybe since Rupert Murdoch was still relevant? Or it's an $83 billion lesson in hubris that business school professors will teach for decades.

Either way, it's going to be fun to watch.

Just probably not on the ad-supported tier. The commercials are still kind of annoying.

Want the full five-part series? Subscribe to ADOTAT+ for Parts 2-5. Because free content is great, but understanding why Netflix might actually pull this off—or spectacularly fail—is worth a few bucks.

Just like that ad-supported tier they're so proud of.

Coming in Part 2: The Warner Bros. Gambit — What Netflix is saying, what they're not saying, and what they definitely don't want you to know about the biggest media acquisition of the decade.

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