HOW NETFLIX SWALLOWED HOLLYWOOD

IT'S A STORY SO GOOD it could have been a screenplay. In 2000, Reed Hastings and Marc Randolph sat down across from John Antioco, then CEO of video rental giant Blockbuster, and pitched him on acquiring their still unprofitable DVD-by-mail startup, Netflix, which at the time had around 300,000 subscribers.

- NATALIE JARVEY

But when they told him their price—$50 million and the chance to develop and run Blockbuster's online rental business—Antioco balked. It was a famously shortsighted business decision: By 2010, Blockbuster had filed for bankruptcy, and Netflix had stormed Hollywood with its entertainment streaming service.

Now Netflix—a behemoth that has moved far beyond streaming others' films and shows, with an estimated $18 billion content spend for 2025—is writing the sequel, following the same underdog-to-winner trope. It announced in early December an $82.7 billion deal to become the new owner of the storied Warner Bros. film and television studios, plus cable crown jewel HBO and streamer HBO Max. The deal comes some 15 years after an executive who previously oversaw those very assets dismissed the notion of Netflix being a threat to Hollywood's power structures: Jeff Bewkes, then CEO of Warner Bros. parent Time Warner, described that scenario in 2010 as “a little bit like, is the Albanian army going to take over the world?”

To be sure, Netflix has never before attempted a deal of this size. And with rival Paramount making a play for the entire Warner Bros. Discovery business through a hostile bid, a Netflix–Warner Bros. tie-up is still far from a sure thing. But even if the deal never actually materializes, Netflix has demonstrated how to not just disrupt an industry but swallow it.

It's a trajectory that's all the more impressive given the company's scrappy, dotcom-era start. “Netflix should have never existed,” says Peter Supino, who analyzes the media and entertainment industries as managing director at Wolfe Research. “Their path relied on a bunch of strategic decisions that were risky and uncertain at times and the body of which proved out to be smashingly correct.”