Netflix Gaming Deal: A Hellish Match
Netflix bid $72 billion for Warner Bros. Discovery in late 2025, then withdrew three months later. What the failed deal means for WB Games.
By:
John Langan
The Complex Merger That Never Was
When Netflix announced a $72 billion bid for Warner Bros. Discovery in December 2025, the deal seemed to put iconic gaming franchises like Hogwarts Legacy and Mortal Kombat on a direct path into a streaming giant's portfolio. Three months later, Netflix withdrew the offer—and Paramount launched a competing bid that WBD's board immediately endorsed. The episode stands as a case study in how gaming gets sidelined in media M&A, and what it means for WB Games' long-term future.
Key Takeaways
- Netflix bid $72 billion for Warner Bros. Discovery in December 2025, then withdrew the offer in February 2026.
- WB Games had already suffered major studio closures—including Monolith Productions and Player First Games—before the deal was floated.
- Netflix Gaming attracted less than 1% of its subscriber base to play games, making it a poor steward for WB's mid-budget titles.
- Netflix shut its Los Angeles AAA studio in October 2024 without releasing a single title, signalling a retreat from high-budget game development.
- Paramount subsequently made a competing all-cash offer that WBD's board endorsed, ending the Netflix chapter.
- Gaming was barely mentioned in either company's public statements about the deal—reflecting the industry's persistent struggle for recognition in media M&A.
The events behind each of these findings unfolded over a three-month window in late 2025 and early 2026.
WB Games' Troubles and Netflix's Ambitions
WB Games entered the deal period already diminished. The company had shuttered Monolith Productions—creators of the acclaimed Shadow of Mordor and its patented Nemesis system—alongside Player First Games in early 2025. MultiVersus and the live-service version of Suicide Squad: Kill the Justice League both underperformed badly, contributing to reported losses exceeding $300 million. Despite the massive commercial success of Hogwarts Legacy, Warner Bros. Discovery's leadership focused heavily on cost reduction over game investment.
Netflix, meanwhile, had spent four years trying to build a meaningful gaming footprint with limited success. The company launched its gaming service in November 2021 with five mobile titles and steadily added studios, including Night School (developers of Oxenfree). Those ambitions stalled when Netflix shut down its Los Angeles AAA studio in October 2024, having never shipped a title, and sold Spry Fox back to its founders in December 2025—one day before the WBD deal was announced.
Netflix's $72 Billion Bid
Netflix's bid valued Warner Bros. Discovery at approximately $72 billion in equity terms, rising to roughly $82.7 billion when debt was included. The announcement on December 5, 2025, immediately raised questions about gaming's role in the transaction. Public commentary from both companies centered on film libraries and streaming rights, while WB Games was mentioned only in passing.
Warner Bros. Discovery CEO David Zaslav spoke about the deal primarily in terms of IP—the film and television catalogue stretching from Harry Potter to DC. Gaming remained an afterthought in nearly every public statement, a dynamic that critics noted reflected the broader struggle for game divisions to assert strategic value inside media holding companies.
Gaming's Role in the Bigger Picture
Netflix's own gaming track record offered a mixed case for stewardship of WB Games' titles. The gaming division attracted less than 1% of Netflix's subscriber base to its games despite years of effort. A partnership with Rockstar to offer Grand Theft Auto titles on the platform drove over 200 million downloads, but that growth came from licensed IP rather than original development.
By 2025, Netflix's gaming leadership had pivoted toward generative AI content and IP-driven mobile games, canceling six planned PC and console ports and laying off staff at Night School Studios. That trajectory sat uncomfortably alongside WB Games' catalogue of mid-budget releases requiring sustained development investment.
How the Deal Collapsed
Netflix withdrew its acquisition offer on February 26, 2026. The following day, Paramount launched a competing all-cash offer at approximately $31 per share, valuing WBD at roughly $111 billion. WBD's board recommended that shareholders consider Paramount's offer, effectively closing the Netflix chapter of the story.
The withdrawal confirmed what the deal's skeptics had argued: the combination was a poor strategic fit. Netflix's gaming ambitions had contracted sharply over the preceding 18 months. Acquiring a mid-tier gaming division at premium media-company prices, while simultaneously pulling back from original game development, was a case that proved difficult to make to investors.
The Strange Saga of Netflix and Warner Bros. Games
The Netflix gaming journey had always been marked by ambition outrunning execution. The company acquired Night School, developers of Oxenfree, in 2021 with plans to build a library of premium narrative games alongside Netflix IP adaptations. Results were modest. The AAA studio launched in 2022 with industry veterans closed in 2024 without shipping a single title. Spry Fox, acquired in 2022, was sold back to its founders in late 2025 after roughly three years under Netflix's ownership.
Over 200 million downloads of Netflix's gaming library have been recorded, but the vast majority came from licensed blockbusters like Grand Theft Auto rather than original titles. That gap—between what Netflix's users wanted (recognizable IP) and what WB Games offered (mid-budget original franchises)—made the deal's gaming rationale difficult to articulate convincingly.
The Transition to a New Model
Netflix's gaming strategy as of 2026 is leaner and more focused than its 2021 vision. The mobile-first library continues to grow around licensed IP, generative AI tools are embedded in production pipelines, and the ambition to produce games that compete with PlayStation Studios or Xbox Game Studios has been quietly shelved.
- AAA original game development: abandoned after the 2024 Los Angeles studio closure.
- Licensed franchise partnerships (e.g., Grand Theft Auto): still active and driving the bulk of downloads.
- Mobile IP games tied to Netflix series: the current core strategy.
What the WBD bid represented was an attempt to shortcut that problem—acquiring a library of recognizable titles rather than building one. The shortcut did not materialize.
A Glimpse Into Potential Outcomes
With Paramount as a potential acquirer rather than Netflix, WB Games' situation changes in character if not in uncertainty. Paramount has not established a meaningful presence in traditional game development, raising the same questions about whether gaming would receive investment under new ownership or be treated primarily as a licensing asset.
- Will Paramount operate WB Games as a distinct unit while licensing its IP?
- Could major titles like Mortal Kombat and Hogwarts Legacy receive sequels under a media-company parent with no development expertise?
- Is there a scenario where WB Games is sold separately to a dedicated games company?
Those questions remain open. What the Netflix episode closed is the assumption that a streaming company's gaming ambitions translate naturally into stewardship of an established mid-budget game portfolio.
Frequently Asked Questions
Did Netflix actually acquire Warner Bros. Discovery or WB Games?
No. Netflix announced a bid in December 2025 but withdrew it in February 2026. Paramount subsequently made a competing offer that WBD's board endorsed.
How much was Netflix's offer for Warner Bros. Discovery?
Netflix's offer valued WBD at approximately $72 billion in equity, or roughly $82.7 billion including debt in the enterprise value calculation.
What happened to Monolith Productions and Player First Games?
Both studios were shut down by Warner Bros. Games in early 2025. Monolith Productions, creators of Shadow of Mordor and the Nemesis system, was closed alongside its in-development Wonder Woman game. Player First Games, developer of MultiVersus, was also shuttered.
What is the Nemesis system?
The Nemesis system is a patented AI mechanic developed by Monolith for Shadow of Mordor (2014) and Shadow of War (2017). It tracks player interactions with enemies over time—enemies remember defeats, receive promotions, and carry grudges. WB Games holds the patent, preventing other publishers from replicating the mechanic without licensing.
How many people use Netflix Gaming?
Less than 1% of Netflix's subscriber base actively plays its games. Over 200 million total downloads have been recorded, though most come from licensed titles like Grand Theft Auto rather than original games.
Why did Netflix close its AAA game studio?
Netflix's Los Angeles AAA studio closed in October 2024 without releasing any titles. The company cited a strategic shift toward mobile games, licensed IP, and AI-assisted production—a retreat from high-budget development.
What does WB Games' future look like after the Netflix deal collapsed?
With a Paramount acquisition of WBD still pending as of mid-2026, WB Games' future depends on how a new parent values its game development operations. Scenarios range from operating it as a licensing-focused unit to a potential separate sale to a dedicated games company.