Illustrated by Cat Sims When K-Pop Demon Hunters broke out as the surprise animated hit of the summer, executives at Netflix scrambled. The company was already well underway building its experiential Netflix House locations in Pennsylvania and Texas, and Marian Lee, the company's CMO and one of the executives tasked with overseeing the launch, was dealing with a question from her colleagues: "How are we getting K-Pop Demon Hunters in?" So she and her team acted quickly, adding in food items to the restaurant, art to the mural outside, and a giant Derpy Tiger statue in the mall entrance. Lee described the effort as proof of Netflix's speed and agility in an otherwise slow-moving business. Related Stories Business The Last King of Hollywood: Inside the War Over Warner Bros. Business As Pay TV Collapses, Sports' Streaming Wars Kick Off "We've given ourselves enough flexibility to have things that we think are anchor IP that will continue to drive people to come back, but also to have the flexibility and agility to swap in things that we see are starting to work," she said, speaking to The Hollywood Reporter in Netflix's 250-seat movie theater in the King of Prussia mall location in November. The Netflix House atrium in the King of Prussia mall in Pennsylvania. Netflix But K-Pop Demon Hunters was also evidence of an uncomfortable truth: Netflix may be the king of streaming entertainment, but it has a long way to go when it comes to building out its intellectual property. In a world where traditional studios have decades' worth of IP, Netflix is still a start-up, one built largely on licensed content. Even some of its biggest hits like Wednesday (a part of MGM's Addams Family universe) and One Piece (based on the long-running manga series) are not owned by the company, with other IP owners benefitting from their success. The battle to control Warner Bros is, beyond just a battle for streaming domination and the future of movie theaters, a battle about IP, and both Paramount and Netflix believe that the Warners library and its long list of franchises can propel them for long into the future. In a business defined by IP, Warners is the "second best studio" after Disney when it comes to its vast library of characters, franchises and worlds, notes Kevin Mayer, the Candle Media CEO who previously served as a top Disney executive. And as Paramount and Netflix jostle for control of that library, the future of those franchises, which include Harry Potter, Friends, Game of Thrones, the DC Comics universe and many, many more, is hanging in the balance. Netflix is an entertainment behemoth that has little in the way of IP. It's why Stranger Things, Bridgerton and Squid Game seem so ubiquitous, as the company has sought to leverage the few franchises it wholly owns to maximum effect. It is a company that built its scale by licensing content from others, be it The Office and Friends or Wednesday and Avatar: The Last Airbender. It was also why Netflix cut more than $500 million for control of Roald Dahl's collection of works, giving it the ability to adapt work like Matilda and Charlie and the Chocolate Factory. "For Netflix, this transaction marks a strategic shift from building its own content to acquiring large-scale IP and studio assets. While Netflix remains the clear leader in global streaming subscribers, the company has not had the luxury of deep, legacy content libraries and has historically been forced to license content from traditional media companies," wrote Bank of America analyst Jessica Reif Ehrlich in a Dec. 7 research note, adding that if Netflix succeeds it would challenge Disney directly in the IP wars: "The DC franchise, supercharged by Netflix's global distribution, could challenge Marvel's market-leading position. More broadly, if Netflix consolidates premium IP, competition for consumer time and attention would increase, potentially pressuring engagement trends on DIS' platforms." "Netflix is doing, obviously, super well with having a virtual studio and doing a lot of licensing, God it has worked," Mayer says. "But you want to really nail down these franchises and have them at your disposal for the long term ... It gives you access on a permanent basis and an advantaged basis to content that otherwise would be competitive and more difficult and uncertain to have access to." Or as Netflix co-CEOs Greg Peters and Ted Sarandos told employees last week in an internal note: "We made this deal because their deep portfolio of iconic franchises, expansive library, and strong studio capabilities will complement - not duplicate - our existing business." Netflix co-CEO Greg Peters, Warner Bros. Discovery CEO David Zaslav and Netflix co-CEO Ted Sarandos visited the Warner Bros. lot on Dec. 17. Warner Bros. Discovery It is a library of content that would instantly make Netflix into a true global franchise power player, in line with the vast reach of its streaming business. But "Paramount Skydance, on the other hand,