Don’t expect Netflix to go head-to-head with ESPN. Here’s where it could still shine in streaming sports.
Netflix has been crushing it with one-off sporting events that have become must-see TV. So why isn’t it going all in on sports?
Streaming brands have long thought of sports programming as one way to boost paying customers and keep them engaged. That seems to be working for Netflix (NFLX), as its blockbuster earnings report this week showed.
The Mike Tyson-Jake Paul boxing match that aired live on Netflix in November was the most streamed global sporting event ever, reaching 108 million viewers, the streaming service said. And 65 million people tuned into the NFL Christmas Day games on Netflix last month, making them the most streamed NFL games ever, according to the league.
But don’t expect Netflix to try going head-to-head with ESPN (DIS) anytime soon.
Netflix executives this week outlined a more deliberate approach to their sports strategy, rather than bidding on full seasons of football games or hosting boxing matches every month.
“We are constantly trying to broaden our programming, and live events are one of those things and sports is part of those live events,” Netflix co-Chief Executive Ted Sarandos said during the earnings call. “This is a really fantastic thing … but it doesn’t change the underlying economics of full-season, big-league sports being extremely challenging.”
While Netflix was at the forefront of the cultural shift from watching cable and broadcast TV to on-demand online streaming, it was one of the last streaming services to get involved in live sporting events. And it still doesn’t have a live-sports portfolio that rivals other streaming platforms.
For example, Comcast Corp.’s (CMCSA) Peacock, Warner Bros. Discovery Inc.’s (WBD) Max and Amazon.com Inc.’s Prime Video (AMZN) all have the rights to hundreds of games from top sports leagues, including the English Premier League, NBA and NFL. Instead of a volume-based sports programming schedule, however, Netflix has focused more on a few live sporting events to keep costs low.
But will Netflix’s recent run of success in live sports lead to a more robust sports lineup that could emulate what other streamers are doing? Don’t bet on it, analysts say, because it’s probably not the smartest play.
Instead, Netflix will likely find more success in picking its spots and hosting select must-see events, as opposed to trying to compete with the likes of ESPN.
“For Netflix versus other streamers, there’s a definite bet on prestige sports experiences that reinforce its leadership status versus less premier, season-long franchise investments,” Jacqueline Corbelli, chief executive of BrightLine, a technology company that specializes in television advertising, told MarketWatch.
Rosenblatt analyst Barton Crockett agreed that Netflix is “aiming for events, not full seasons, and it is finding ample events to choose from.”
Even as Netflix clobbered subscriber expectations for its latest quarter, its management downplayed the role that sports played in that big beat. Sports programming made up a “small minority” of net subscriber additions, co-Chief Executive Greg Peters said in response to a question on Netflix’s earnings call.
Corbelli was more upbeat. “The subscriber growth seen in the last quarter was 100% without a doubt heavily affected by these live sports events,” she said. “It was a great bet, and it paid off.”
Focusing on the subscriber impact might be missing the point anyway. Gone are the days when streaming companies would try to amass as many new members as possible without regard for economics. Now, investors are focused more on the financial puts and takes of streaming bets, and Netflix seems to be impressing with its sports forays.
“The ad sales for Christmas NFL could have covered the bulk of the licensing cost for those games, we estimate,” Crockett said in a report.
He added that Netflix has a “better business model for sports” than some traditional TV media companies because of this focus on fewer, premier events that are cheaper to license than full seasons of sports leagues’ games.
It seems unlikely that Netflix will mess with its winning financial model to get into a bidding war over expensive league rights, especially when the company is deemphasizing subscriber numbers. The company will stop reporting member figures on a regular basis, meaning it will have even more incentive to look after its bottom line, since that’ll become a bigger focal point for investors as well.
Netflix declined to comment for this article.
Many streaming brands involved in live sports acquire rights to games for longer periods to avoid what is referred to as subscriber churn – the idea of consumers paying for a service and then canceling it after their preferred event or game concludes.
For example, last NFL season, Peacock paid $110 million to air an NFL playoff game, and got a 2.8-million-subscriber boost in return. But while exact numbers are unknown, some news outlets including Business Insider reported that Peacock lost 500,000 subscribers in the months following its NFL playoff game, before rebounding again during last year’s Summer Olympics.
Netflix acknowledged in its shareholder letter that sports “will likely be a small percentage of our total view hours.” But while it might be risky for other streaming companies to dabble in one-time sporting events if they don’t have enough other compelling content to keep subscribers engaged afterwards, Netflix doesn’t have that problem. Netflix’s U.S. library of content boasted nearly 7,500 titles at the end of 2024, according to What’s On Netflix.
“Content was and is the king,” said Corbelli.