Netflix Inc. (NASDAQ:NFLX) is making waves with its $82.7 billion all-cash acquisition of Warner Bros. Discovery Inc. (NASDAQ:WBD), marking a dramatic shift from the streaming giant’s traditional “build-not-buy” philosophy.

YouTube Is Primary Competitive Threat

In a Thursday interview with Stratechery‘s Ben Thompson, Netflix co-CEO Greg Peters identified Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) owned YouTube as the company’s most formidable competitor. “YouTube is the formidable competitor. They drive a lot of hours, they have a great model,” Peters stated in the interview transcript.

Peters explained that Netflix views competition through the lens of time and attention, positioning YouTube’s dominance in viewership as a key driver behind the Warner Bros. acquisition strategy.

Rationale Behind $83 Billion Warner Deal

The Netflix co-CEO outlined three primary value drivers for the acquisition: theatrical distribution capabilities, expanded production infrastructure, and the HBO brand’s premium positioning. “We started building the value case for this and we got to impressive numbers,” Peters said in the interview.

According to Peters, Warner Bros.’ content library is currently “being underexploited” and Netflix’s global footprint could drive significantly more viewing.

The company switched to an all-cash offer of $27.75 per share on Wednesday, replacing an earlier mixed offer of $23.25 in cash plus $4.50 in Netflix stock.

Regulatory Arguments

Peters argued the deal should be viewed as “really a vertical deal” due to theatrical and production components.

He noted that the majority of HBO’s approximately 100 million subscribers already subscribe to Netflix, positioning the combination as complementary rather than directly competitive.

The company is framing its competitive landscape broadly, with Peters emphasizing that YouTube now produces NFL games, will broadcast the Oscars, and has secured deals with major UK broadcasters, including BBC, Channel 4, and ITV.

NFLX Price Action: Netflix shares were up 2.81% at $85.88 at the time of publication on Friday, according to Benzinga Pro data.

Photo: ssi77 / Shutterstock