After losing the high-stakes bidding war for Warner Bros. Discovery, Netflix is pivoting its overall strategy and announced it will refocus on ads and content after the failed Warner Bros. bid. According to sources, investors will now look for Netflix to emphasize content spending and ad business growth as key drivers when it reports quarterly earnings on Thursday, marking the streaming giant’s first results since its failed bid for Warner Bros. Discovery.
Buying Warner Bros. would have handed Netflix a clutch of prized franchises, including “Game of Thrones” and “Friends,” without the costly effort of building out its own. Instead, the company will face tougher competition from a combined Warner Bros. and Paramount/Skydance if that proposed $110 billion deal closes. Netflix is expected to report a 15.5 percent increase in revenue to $12.18 billion in the first quarter, with $634 million coming from advertising, according to analysts polled by LSEG.
The company raised U.S. prices in March, which some analysts say could lead it to raise its full-year revenue forecast. The price increase could also nudge more users towards its ad-supported tier, whose revenue remains small.
Netflix shares have gained 13% so far this year, with the stock up about 26% since the company walked away from the $72 billion Warner Bros. deal. Investors now expect Netflix to refocus on sports and other live events as it looks to boost ad revenue. “We’re kind of entering another phase for the ad business, where they are becoming one of the largest scaled global advertising platforms,” said John Belton, portfolio manager at Gabelli Funds, which owns Netflix shares. Notably, Netflix stock rose ahead of the video streamer’s first-quarter report, and the video streaming platform shares climbed in the stock market.
It happened as the company expanded its live programming slate during the quarter, highlighted by a concert by K-pop supergroup BTS streamed from Seoul that drew 18.4 million viewers worldwide, as well as the 2026 World Baseball Classic, which became the most streamed baseball game globally. Additionally, Netflix sales and earnings targets for this year will reflect the company’s “durable monetisation algorithm” and the removal of integration costs from its failed bid for Warner Bros. Discovery WBD.
