Paramount awarded Netflix a $2.8 billion breakup fee on February 27 after outbidding the streaming giant against Warner Bros.’ Discovery. While Wall Street is talking about buybacks and balance sheets, I want to talk about something a little more interesting.
Yes, the $2.8 billion that David Ellison and Co. handed them. It’s only a small portion of Netflix’s annual content spending, as co-CEOs Ted Sarandos and Greg Peters noted when receiving the fee: “This year, we will invest nearly $20 billion in high-quality movies and series and expand our entertainment offerings.”
But let’s review the logic of the additional $2.8 billion in this column. What happens if Netflix uses this windfall to open up the creator economy? Despite its 325 million subscribers, there are two problems the streaming giant has yet to solve:
The first problem: defending the advantage of disruption
Netflix has remarkably low traffic for a subscription product. But they have also reached a saturation point in their most important markets. As growth in the United States slows, the business model increasingly depends on… save subscribers have. As competition intensifies and all streamers fight for the same wallets, this low stop rate will come under real pressure. The streamers who win in the next decade won’t be the ones who gain the most subscribers, they’ll be the ones who give people a reason to stay every day. YouTube and podcasts do this easily. It’s ambient, habitual, and always on. People don’t cancel YouTube because the algorithm never stops feeding them. Netflix needs the same daily traction before someone else builds it first.
Problem 2: Daytime
Netflix owns prime time. But between 9am and 5pm? This has long been an area of linear television, talk shows, YouTube, and podcasts. Netflix CFO Spencer Newman confirmed at a Morgan Stanley conference on March 4 that their podcast slate over-indexes in morning and afternoon viewing and is heavily skewed toward mobile. This is not a byproduct of coordination, that is the point. Podcasts is Netflix’s first real attempt at a daytime programming block for the streaming era.
Both problems have the same solution: build the kind of content that people come back to out of habit, not just hype. $2.8 billion is the war chest to do this.
So how does Netflix think about solving these two issues with $2.8 billion? It should start looking to capitalize on the audio-video streaming boom much more than early testing the waters of its deals with the likes of Spotify, iHeart, Barstool and others.
After founding the Parcast podcast studio and selling it to Spotify, I launched PAVE as a modern media company that works across different platforms – from podcasts to YouTube and social distribution. I bet the most valuable players will have an IP that travels across formats, connecting with loyal fans on any screen. It’s not about filling the gap that someone else left behind. It’s about what Netflix does better than anyone else. It functions like a studio that owns the intellectual property, controls the rights, and builds the franchises.
When a platform becomes the place consumers go to find great content, something powerful happens. Creative people appear. Follow the great content. Consumers follow content. A flywheel that builds up over time to an insurmountable advantage. The platforms that are winning this game aren’t just aggregating content. They collect loyalty. And loyal users don’t fluctuate.
Netflix already understands this in movies and TV. The next step is to apply the same muscles to podcasting. If Netflix is uniquely able to make intellectual property more valuable, and it is, the obvious answer is to own the intellectual property. This means getting a creator-focused podcast studio. The person who releases the intellectual property, owns the rights, thinks in terms of franchises not episodes, and has deep talent relationships.
This is what makes an acquisition the right move rather than just hiring into the space: the right podcast studio doesn’t just bring in content and intellectual property. It brings together operators who already know how the creator economy works. People who understand how to build audiences from scratch, how talent relationships actually work, and how to move at the speed that creators expect. You can’t rent your way into that institutional knowledge. You have to get it.
The goal is not another prestige drama or Hollywood IP. They are studios and talent with loyal, established audiences and people who know how to continue to grow those audiences.
Icon licensing. List building.
Think about what Netflix did to docs and stand-up comedy when it went out and bought the best talent in those formats. Now apply this logic to the economy of creators.
Alex Cooper is your Jimmy Fallon. Mel Robbins is your Oprah. CEO Diaries He’s your Larry King. These creators have already spent years building audiences in the tens of millions who trust them, follow them, and consume everything they create. Netflix doesn’t need to build this trust from scratch. They need to license it exclusively.
Identify creators who have achieved widespread success in the areas of true crime, health, business, culture, and comedy. Treat them to the next chapter exclusively on Netflix. The audience follows. They always follow the Creator.
Content creators have trained their audiences to accept ads. Netflix should take advantage of this.
When I was at Spotify, we had this conversation more than once. The question was simple. Will subscribers who pay for an ad-free experience continue to accept ads within podcast content?
The answer, every time, was yes. Because creator content never feels like a break. Audience expectations have already been met before the play button is pressed. They trust the host. They welcome reading. This is not an advertisement. This is part of the offer.
This dynamic unlocks ad revenue across both Netflix tiers simultaneously. In the ad-supported tier, creator content becomes the highest trusted and most shared inventory on the platform. At the ad-free tier, host reading and creator-led sponsorship integrations exist within the content itself, just as they do in every major podcast today, and subscribers never feel like the experience is compromised.
Netflix stops thinking of both levels as advertising versus no advertising, and starts thinking of both as monetizable. They are already doing this through live sports. Creator content works the same way.
Bringing creators to Netflix dramatically expands ad inventory with inherently monetization-friendly content, at the moment when the ad-supported tier needs breadth and depth. But you can’t maximize this inventory using traditional advertising technique. The next logical step is to acquire a native ad network for creators. A language that truly speaks the language of host-read integrations, brand partnerships, and creator-led sponsorships. Get that ability. This is how Netflix goes from selling CPMs on dramas to having a whole new premium advertising category.
Build a roster of vertical video programming
The final piece is the original mobile phone. Netflix has largely ignored the format that dominates the phone of anyone under 35. The last company to try to break this on a large scale became the focus of the entire media industry.
Quibi wasn’t a bad idea. It was a bad idea at the wrong time. They tried to build new behavior from scratch with no distribution flywheel, no established ecosystem, and no organic discovery engine behind it.
But the shape itself? The format was correct. Short-form, mobile-first, image-oriented content is exactly what the next generation wants Blood from subscribers. They only want it from creators they already follow, on a platform they already trust.
This is the difference. Commission a dedicated slate of vertical programming across travel, food, sports docs, cultural commentary and true crime. Content designed for 8-minute windows on the go, not 45-minute episodes on TV. Let the creators who already have these audiences lead the way.
Quibi proved that the market was not ready. Netflix can prove that the market has been waiting for the right company to do it right.
The bigger picture
Netflix’s real competition isn’t Paramount or Disney+. It’s human interest. And right now, YouTube gets more daily hours of that attention than any streaming service on the planet.
The creator economy is not a trend. It is the infrastructure of modern media consumption. Creator-driven content is always what keeps people on the platform, not just visiting them. Netflix has $2.8 billion, the best studio infrastructure in the world, and the most advanced consumer data on the planet.
The only question is whether they are bold enough to use all three together.
Does Netflix have a generational opportunity or will they play it safe?
Before launching PAVE Studios, Max Cutler built and sold Parcast Studios to Spotify, then spent years as the platform’s VP of deals with Alex Cooper, Emma Chamberlain, and more. PAVE Studios includes the Crime House and OpenMind brands.
