How Netflix-Warner Bros Merger Will Hurt Biz

The domestic box office is forecasted again to hit $9 billion in 2026.

Wait, we said that last year about this year. What happened? With 2025 expected to file between $8.8 billion-$8.9 billion, essentially, it’s the difference of one tentpole not working, so, take your pick: Paramount‘s Running Man, Disney’s Tron: Ares and/or Elio.

That miss aside, the domestic box office post-Covid has a good thing going on with the third $8.5B+ year in a row. How long then can the entertainment industry keep theatrical moviegoing alive in the face of the potential gloom and doom from Netflix‘s anticipated swallow-up of Warner Bros? The pandemic and the 2023 strikes dashed all hopes of box office rebuilding to a $10B-$11B annual business. Give thanks for what we have: the second-best year at the B.O. post Covid after 2023’s record $9B.

Some studio execs, counting the approximate 12-month regulatory period for Netflix to wed Warners, believe that the theatrical business has three years left of great juice before ticket sales head for a downturn — that is if Netflix co-CEO Ted Sarandos collapses the exclusive theatrical window to 17 days.

That’s the worst-case scenario, not a calculated forecast by Ernst & Young.

And true, when it comes to David Ellison‘s bid for Warner Bros, it ain’t over till it’s over, the Paramount CEO unwilling to go quietly into that night. A Warner Bros combo with the Melrose Ave lot is a whole other set of agita. Still, there’s a small sense of ease with Ellison as he’s known to be a champion for theatrical; he’s even made the lofty promise to keep two major studio slates afloat at 30 movies a year.

The bigger paranoia for the future of moviegoing lies with a Netflix-Warner Bros dystopian future, particularly since the latter has accepted the former’s bid officially.

However, at this point in time, there’s a mixed bag of theories out there in regards to Netflix’s long-term impact on theatrical.

Yes, yes, Sarandos has been on a press tour of late, exclaiming that he’s pro-theatrical (despite whatever he’s said in the past), that he’ll respect the terms of Warner Bros’ theatrical commitments for the slate he inherits (figuring it’s from 2027 or 2028 onward). Netflix and Warner Bros, aside from HBO Max, arguably complement each other: Netflix gets access to a global theatrical distribution network that they’ve never had before, a whole other line of cash.

“We’re also fully committed to releasing Warner Bros. films in theaters, with a traditional window, so audiences everywhere can enjoy them on the big screen,” Sarandos has said to the media.

“There’s been a lot of talk about theatrical distribution, so we want to set the record straight: we are 100% committed to releasing Warner Bros. films in theaters with industry-standard windows. While this hasn’t been part of our business model until now, we are looking forward to bringing this expertise from Warner Bros. to Netflix,” he’s also said.

For some of the executive sources, who asked to speak anonymously to us, Netflix’s $83 billion pending purchase of Warner Bros was symbolic in a bad way: A price that high indicates that the streamer is out to decimate the theatrical business.

Why spend all that money, Netflix, when you can license content at a fraction of the cost?

The belief by cynics is that Netflix wants to be a streaming service. The end. Anyone who is watching a movie in a theater, isn’t at home watching Netflix. How does the streamer even begin to wrap its head around a downstream ancillary model of international TV windows? Will they [gulp] embrace the cottage industry that is PVOD? But that’s so old -ashioned by Los Gatos tech standards. Their desire for a 17-day theatrical window is a farm-to-table model that gets big screen fare on the service ASAP.

However, shorter windows lead to the failure of more movies (particularly original and indie titles), which leads to cinemas closing and rising average ticket prices, which some say are already too high (EntTelligence reports average ticket price was $13.29 for 2025, premium large format ticket was $17.65).

Other major studio production bosses have a Zen mindset, and it’s that one studio alone can’t unilaterally crush the theatrical window. But isn’t there a drip factor? Aren’t moviegoing patterns already changing post-Covid? The programmatic reason to attend the cinemas has eroded greatly. Exhibit A: All those dark, upscale, sophisticated movies that failed in the fall. One of the reasons blamed is that shorter windows post-pandemic have influenced older adult moviegoers to skip cinemas and wait for titles at home.

Now, there’s a faction who gives Sarandos the benefit of the doubt, that he’s not completely the grim reaper of theatrical.

Says who? Myriad Warner Bros insiders who heard him and co-CEO Greg Peters speak on Dec. 17 on the Burbank, CA lot. They say he’s excited about theatrical and the WB asset, and he relayed that passion. Don’t bet against him.

Also, those giving confidence to Sarandos are his former exec colleagues who’ve relocated to other motion picture streamers. They say he’ll size Warner’s theatrical business up, notice its worth properly, be open minded, and not destroy it. Not to mention, movies that played in cinemas constantly rank in Netflix’s top 10 and are the drivers of subscriptions and views. Currently, Sony has a pay-one U.S. window with Netflix that’s up for renewal next year.

“If Netflix wanted to kill theatrical, they could have just bought the top three exhibitors for close to $20 billion, which is significantly less than Warner Bros,” says one cinema partner who is optimistic about a future with the streamer.

The next test how Netflix handles theatrical is with Greta Gerwig’s $200M Narnia movie, which is on a 28-day exclusive window in global Imax auditoriums. Does the movie go wide? That hasn’t been announced yet. Netflix just bungled the handling of Rian Johnson’s Wake Up Dead Man: A Knives Out Mystery, which didn’t play the top three circuits—AMC, Regal and Cinemark—due to a shortened window. As such, the movie made $4M in its first five days, versus the $15M+ first week that the previous Netflix-released Knives Out franchise title, Glass Onion, posted (Netflix’s defense is that they kept all their awards prestige titles, i.e. Frankenstein, Jay Kelly, A House of Dynamite, on a 17-day theatrical window).

A stat for Netflix to keep in mind: Of the 760 million who attended movies this year in North America per EntTelligence, 21% of them went to see a Warner Bros movie (compare this to Disney, the No. 1 studio, which repped 25% of 2025 annual admissions. Universal pulled in 18.5% of admissions, with Paramount at 6.4%, Sony at 6.3%, Lionsgate at 3.7% and A24 at 2.4%). There are several billion-dollar plus potential tentpole movies in the mix for next year, i.e. Christopher Nolan’s The Odyssey, Star Wars: Mandalorian and Grogu, Super Mario Bros Galaxy and Spider-Man: Brand New Day. Some event pics are even fearlessly facing off against each other next Christmas, i.e. Dune: Part III (which will keep Imax screens, and not move) against Avengers: Doomsday. Ya don’t get to $1 billion in 17 days like Zootopia 2 unless people are aware they can’t watch the movie in 17 days (successful Disney movies have an exclusive theatrical window to SVOD that’s typically 100-plus days). After one of the best Christmas holidays at the B.O. post-Covid at $68M, and with a mid-budgeted movie like Marty Supreme heading to a $25M-$30M 4-day start, along with a 3D spectacle like James Cameron’s Avatar: Fire and Ash (already past a half billion worldwide), it’s clear the audience still crave the theatrical experience. Audiences delivered Netflix their first No. 1 grossing movie in KPop Demon Hunters Singalong back in August with $19M. The Stranger Things series finale in theaters over New Year’s Eve and Day is buzzed to have sold out myriad auditoriums.

But after the Warner Bros merger honeymoon is over two to three years from now, if Netflix attempts to take the industry to a 17-day theatrical window, who will stop them? Will exhibition truly backstop them? Or will they cave in, out of financial desperation, like they did when they played KPop Demon Hunters after the movie already streamed on Netflix for about a month? Would they reject playing Matt Reeves’ The Batman 2 on a 17-day window? Or play it, because it’s Batman? The movie is currently dated for an Oct. 1, 2027 release. Will the Academy of Motion Picture Arts and Sciences protect the theatrical window by insisting that all movies yearning to qualify for the Oscars play at least 30 days exclusively in cinemas? Highly unlikely as Netflix is already a $5M-$10M donor to the Academy Museum. Will the talent reps rise up like they did against former WarnerMedia CEO Jason Kilar’s popcorn project and speak truth to power? And anti-trust federal regulators? Hello, Bueller, are you there?

No doubt, it will take a village to keep the legacy studio model and the theatrical business alive.

Observes one film financier about the streamer vs. theatrical hostility: “A casino is a great business, yes, for the owners of the casino. It’s bad for everyone else. Everyone who goes through it is a loser, and it’s bad for the town where the casino exists. It’s bad for culture at large. Likewise, a streaming service is a great business for the owner of an SVOD service. Stable cash, no risk to your content. But is it a great business for culture? No.”