Last month, the deal that was supposed to reshape Hollywood fell apart.
After a protracted, highly visible bidding war for Warner Bros. Discovery, Netflix ultimately walked away from the tie-up, forcing Paramount to pay $110 billion for the asset and fork over a $2.8 billion break-up fee to Netflix.
Now, with cash in hand, its stock price rising, and access to an already formidable war chest, the real question is what comes next for the streamer.
The easy answer is nothing. Netflix is the most profitable company in streaming, having generated roughly $13 billion in operating income last year. It has more than 325 million subscribers and no urgent problems to solve. Plus, according to Oaklins DeSilva+Phillips senior advisor Erica Gruene, the history of major media deals is not exactly an advertisement for doing them.
"If you look at the history of media transactions, it's basically a warning against it," Gruene said. "They often destroy a lot more value than they create."
A representative for Netflix pointed to recent remarks made by chief financial officer Spence Neumann, who downplayed its M&A ambitions at an investor conference earlier this month.
But the company, which has historically preferred to build products rather than buy them, in recent months demonstrated a newfound openness to paying a premium for the right asset. And the multimonth WBD flirtation suggests an appetite for something larger than its typical small-bet acquisition style.
So, what should the company buy now? I put that question to eight analysts, investors, and media strategists. Their answers ranged from the obvious to the genuinely surprising.
Sports rights or a sports platform
Netflix's recent push into live programming, most visibly its deal to stream WWE Raw, has made plain that sports programming is a priority for the streaming giant.
But the company still lacks a coherent sports strategy and the infrastructure to support one, according to Chris Cochrane, chief strategy officer at the programmatic ad agency Plug Media.
It could solve those problems by acquiring a sports platform like DAZN, Cochrane said, addressing both problems at once by delivering rights, relationships, and a ready-made audience of sports subscribers.
"Netflix still lacks a consistent sports strategy," Cochrane said. "Acquiring a sports platform could give it immediate rights infrastructure and established relationships in the sports ecosystem."
Alan Wolk, a media analyst and cofounder of TVREV, makes a similar case for the company to acquire NBCU, noting that its streaming service Peacock would come bundled with substantial sports rights, including the NFL, the Olympics, the Premier League, supercharging Netflix's live ambitions overnight.
The streaming math, he argues, increasingly favors whoever can claim the last monocultural event.
"Sports," he said, "is the last bastion of monoculture."
A gaming publisher
Netflix has been trying to crack gaming for years, with middling results. Its mobile gaming library has grown but has failed to meaningfully move the needle.
The problem is that Netflix keeps flirting with complicated business models without committing to them, according to media analyst and Parqor founder Andrew Rosen. Gaming, he notes, is fundamentally a community product, one that depends on ads, in-app purchases, and social features that Netflix's platform doesn't support.
The solution, several experts suggest, is to stop building and start buying.
Cochrane pointed to EA or Ubisoft as candidates that would instantly deliver premium IP and a new content pipeline, while media strategist Evan Shapiro made the case for Take-Two or Roblox.
“Netflix has been failing in gaming for years," Shapiro said. "Roblox has never been profitable. And it is chock full of great IP."
According to both analysts, gaming engagement is a different animal than video engagement, and Netflix needs both.
Lionsgate
More than one expert landed independently on Lionsgate as the most practical near-term target, and the math is hard to argue with, as the studio could conceivably be acquired for roughly what Netflix just pocketed in break-up fees.
"John Wick alone might be worth it,” Shapiro said.
Lionsgate brings the Hunger Games and Twilight franchises, as well as a clutch of FAST channels. Its streaming service Starz also carries a library of content not dissimilar to that of WBD, including DC Comics properties like Lucifer, which drive an outsized share of viewing, according to Rosen.
Indeed, if Netflix loses access to WBD's library following its Paramount acquisition, Lionsgate starts to look less like an opportunistic buy and more like a necessity.
ITV
The British broadcaster might not be the flashiest acquisition target on this list, but Shapiro makes a pointed case for it.
ITV would give Netflix a meaningful foothold in the UK market, where its engagement has, by some measures, plateaued. It would also, not incidentally, keep ITV out of Comcast's hands.
Stealing ITV away from Comcast has a double-edged benefit, according to Shapiro: it nets inventory in a key international market and blocks it from a competitor.
Plus, non-fiction formats travel well regardless of where they're produced, according to Core Advisors partner Blake Saunders.
"The location of a production company for unscripted content doesn’t really matter,” Saunders said.
Spotify
The wildcard that multiple sources raised independently, as well as the one that generated the most enthusiasm, is Spotify.
The two companies are already deepening their relationship through a podcast partnership, and the strategic logic is genuinely compelling, as combining them would create a massive subscription entertainment platform that spans video, audio, and live content.
"It would give Netflix immediate scale and open up a much broader advertising proposition," Cochrane said.
There are, of course, substantial barriers.
Spotify stock is at an all-time high, Daniel Ek maintains founder control, and the deal would invite regulatory scrutiny.
But the audio-video convergence story is real, according to LightShed Ventures’ partner Rich Greenfield. And Rosen pointed to a specific tactical advantage, in that Netflix's homepage creates far less friction for video podcasts than Spotify's does, which could matter enormously as that format continues to grow.
Roku
Gruene raised one target—Roku—that the others largely passed over, a pitch less about content and more about what Netflix still lacks on the business side.
Advertising has become an increasingly important part of Netflix's revenue mix, and Roku is an adtech powerhouse with deep roots in connected TV.
"Netflix is good at making their own content," Gruene said. "But I'm always interested in what they don't have that would drive better revenue."
Acquiring Roku would hand Netflix a mature advertising infrastructure and a massive distribution platform, without adding a single writer or showrunner to the payroll.
Nothing
The contrarian position had its merits, articulated most forcefully by Gruene and Greenfield.
Netflix demonstrated remarkable discipline by walking away from a deal that many believe would have burdened the company with debt, bureaucracy, and a library of diminishing assets. The company should savor its savvy, according to Gruene.
"Take the money and run," she said. "They just walked away with $3 billion: do something with it that's proprietary, that you can use to block from others, that customers will stick with you for."
Greenfield, for his part, thinks the acquisition landscape is simply too lumpy to make a compelling case for anything. Netflix should wait and watch the rest of the industry atomize itself into more digestible pieces, then pounce when the timing is right, according to Greenfield.
"It's far more likely that Netflix buys nothing and waits to be opportunistic," he said.
That strategy sounds a lot like what Netflix was doing in the months leading up to its near-purchase of Warner Bros. Discovery. The war room, it seems, never really closes.
