Netflix is bidding over $80 billion to buy Warner Bros., and it’s probably not doing it for the games. But the company will still come away with a ton of them if the merger goes through. Warner Bros. Games is one of the few major publishers left in the U.S. following years of big acquisition deals. What might be closer to a rounding error relative to the larger movie and TV portfolio still marks a huge shift for the industry. And Netflix’s incredibly chaotic fumbling of gaming over the last several years raises some alarm bells.
The king of streaming confirmed during a conference call presentation about the newly revealed deal that games would be part of the transaction, but never discussed them outright. Instead, they were relegated to the smallest square on a presentation slide outlining the various components of the merger. They were lumped in with “Games & Consumer Product & Experiences” alongside much bigger brands like HBO, DC, Harry Potter, and Superman.
Netflix / Kotaku
Even with its massive success, the best-selling game of 2023, Hogwarts Legacy, was clearly nowhere close to top-of-mind for Netflix co-CEOs Ted Sarandos and Greg Peters. The open-world wizarding game already has a sequel in development at Avalanche Software, and it’s supposed to have some level of crossover with the upcoming HBO Harry Potter reboot. The first Hogwarts Legacy sold over 30 million copies. In revenue terms at least, that puts it way ahead of the global box office for something like James Gunn’s first Superman movie.
Then there’s TT Games, the UK-based maker of the recent hit Lego Star Wars: The Skywalker Saga. It announced a new adaptation of Batman earlier this year called Lego Batman: The Legacy of the Dark Knight, which acts as a best-of sizzle reel for the comic book hero’s peak movie moments in an Arkham-style open world. There’s no release date yet, but it seems likely to arrive sometime in 2026. If it’s anything like the Skywalker Saga, it’ll be another top-seller.
Netflix will also become the new home of Mortal Kombat. While a new movie launches next year, fans have been waiting for NeatherRealms to return to the DC universe with Injustice 3. The studio announced earlier this year that it was done shipping new DLC for 2023’s Mortal Kombat 1 and would switch to focusing on its “next project” instead. Unless Ed Boon’s team is quietly at work on a completely new cross-over fighting game, a return to the alternate DC universe where Superman is bad still seems like the safest bet.
The fate of Rocksteady Studios
After that, things at Warner Bros. Games start to get really messy, thanks to years of seemingly short-sighted and chaotic executive decisions. Rocksteady Studios, once the team behind premier blockbusters like Batman: Arkham City and Batman: Arkham Knight, has been licking its wounds after the dismal failure of last year’s live service spin-off, Suicide Squad: Kill The Justice League. Encouraged by publisher leadership despite misgivings from the studio floor, the multiplayer loot shooter lost over $200 million, according to Bloomberg.
The studio is reportedly back to focusing on the Arkham franchise that made it famous, but a new entry would still be years away during a time when AAA development is more expensive and precarious than ever. Earlier this year, Warner Bros. Games took an ax to many of its other studios, including MultiVersus maker Player First Games, WB San Diego, which was making a free-to-play AAA game, and Monolith Productions, which was working on a long-in-development adaptation of Wonder Woman. The latter had a storied history, including developing the Middle-earth: Shadow of Mordor series, but lost key leadership after it was forced to pivot from a new IP to adapting Wonder Woman.
All of this turmoil resulted in publishing head David Haddad being fired from Warner Bros. Games after a decade-plus tenure. The game division’s struggles may have also been compounded by whip-lash from above, amid Warner Bros. Discovery CEO David Zaslav’s ongoing whirlwind tour through the unraveling conglomerate. Despite casually trampling on marketing plans by revealing projects early during investor calls, Zaslav never seemed to be interested in providing Warner Bros. Games with a clear mission or mandate other than “help make stock price go up.”
The Netflix Gaming debacle
News of the sale might be more reassuring if Netflix management didn’t seem equally at a loss when it comes to games. The streamer snatched up a bunch of small studios, including notable indie darlings like Oxenfree maker Night School Studio and Cozy Grove maker Spry Fox over the years. It loaded up its mobile app with tons of critically-acclaimed games from Hades to The Rise of the Golden Idol. It sought big-name additions like the GTA Trilogy Remastered. It even plunged ahead with an AAA studio called Team Blue that pulled veterans from Overwatch, Halo, and God of War.
But despite bundling top games with its standard subscription service, almost nobody played them. It started abandoning indie game deals, cutting resources, and quietly shuttered its AAA team last year. Just this week, Netflix announced it was selling off Spry Fox, which it bought only three years ago, though the ambitious 3D Studio-Ghibli-meets-Animal-Crossing-chillfest called Spirit Crossing will remain in development. Instead, the company’s big focus moving forward will be party games and quick-turn-around licensed junk for its biggest streaming hits like Squid Games and Bridgerton. It’s the latest example of a tech company racing into gaming and falling flat on its face.
So where does that leave Warner Bros. Games and its checkered portfolio of major games and studios? It’s hard to say. In some ways, it complements all of the areas of gaming where Netflix has already failed or retreated. It may not be high up on the list of synergies, but maybe the possibility of an eventual Lego Stranger Things anthology is still part of the streaming platform’s overall ambitions for the merger. Or maybe gaming, and AAA blockbuster gaming in particular, is so peripheral to Netflix’s broader business that Warner Bros. Gaming will find itself in an even more precarious position.
Giant acquisitions are rarely as neat and tidy in practice as they appear on paper or in a PowerPoint presentation, even in the best of times, let alone when they’re thrown together in the midst of bidding wars, tumultuous legacy media transformations, and a race toward industry consolidation in order to achieve monopoly pricing power. The only thing worse is the alternatives: the Bari Weis network, Microsoft, or Saudi Arabia aren’t great options either.
