Boxers Jake Paul (left) and Mike Tyson (right).
Getty Images Sports | Getty Images
In the competitive world of live sports streaming, Netflix is taking another step into the arena.
In July, the media giant will broadcast a boxing match between legendary fighter Mike Tyson and social media personality turned boxer Jake Paul, 30 years Tyson’s junior. This will be Tyson’s first professional fight in 19 years – and Netflix management is touting the event, along with its other live programming, as “cultural moments” relevant not only to viewers, but also to advertisers.
Advertising is one of Netflix’s newest revenue streams, and the company said in an April letter to shareholders that it was trying to evolve ads and make them a “more meaningful contributor” to revenue. business.
Netflix has already hedged its investments in live sports, differentiating its activities in this area – such as its more than $5 billion licensing deal with WWE – as “sports entertainment.” But during his most recent conference call in April, co-CEO Ted Sarandos said Netflix was not “anti-sports, but supportive of profitable growth.” He suggested that, under the right circumstances, the company could expand its live sports programming.
“Our North Star is to increase engagement, revenue and profits, and if we find opportunities to grow all three, we will do so through an ever-widening variety of quality entertainment,” Sarandos said. “So when and if those opportunities present themselves, we’ll be able to go in and do it – which we believe we’ve done in our deal with WWE – if we can repeat that dynamic and other things, including sports, we will examine with certainty.
Netflix has recently hosted several other one-off live sporting events paired with documentary-style series. It livestreamed the “Netflix Cup” last November, which featured Formula One racers and professional golfers, as well as “The Netflix Slam” in March, which featured tennis stars like Rafael Nadal. The company has also delved into live comedy shows, broadcasting a slew of events including the recent Tom Brady roast.
But Netflix could soon make its boldest move in sports: acquiring the rights to exclusively stream two NFL games on Christmas next season, according to Puck.
Netflix is taking a “deliberate path” to try to understand the potential outcomes and benefits of live sports programming, according to Marty Conway, an assistant professor at Georgetown University. Conway teaches courses on leadership and sports management and spent much of his career as a marketing manager for two Major League Baseball teams.
“That’s what they’re probably testing here, when they play these different sports, tennis, boxing, golf… What kind of audience are they getting and what’s the reaction of the advertising market when they are going to market with these products? type of opportunities?” Conway said.
Laura Martin, an analyst at Needham, said she thinks Netflix’s sports streaming plans will boost profits.
“There is a class of advertisers who want to get involved in sports, which expands their reach and allows them to reach certain advertising budgets,” Martin said. And there are advertisers that Netflix can attract with this kind of content “that it wouldn’t be able to get otherwise,” she added.
Netflix might even have a leg up on its sports streaming peers, according to Brandon Katz, entertainment industry strategist at Parrot Analytics. The company’s huge repository of content can help retain viewers who might have subscribed only to live sports, he said, and Netflix’s knowledge of its niche audiences can really bolster targeted ads.
Although growth in its advertising segment has been slow, Katz said advertisers generally remain excited about Netflix’s long-term potential. As of January 2024, Netflix’s ad-supported tier has over 23 million monthly active users.
“I think there is still a very strong affinity for the platform in the long term – I think advertisers see the benefits,” he said. “I think they see that Netflix has, for better or worse for the industry, managed to overcome all the challenges and setbacks that have been thrown at it as a producer of original content.”
Conway said he believes Netflix will inevitably delve further into live sports, as has been the case for many streaming services, including those owned by Apple, Amazon, Disney and Warner Bros. Discovery.
Disney, Fox and Warner Bros. announced earlier this year that they would launch a joint sports streaming service that would include all broadcast and cable networks owned by the three companies that broadcast sports. In recent years, Apple has purchased the rights to broadcast Major League Baseball and Major League Soccer games. Alongside several other media giants, Amazon signed a huge deal with the National Football League in February. And while its exclusive agreement with Disney and Warner Bros. comes to an end, the National Basketball Association could sign with new partners. CNBC reported last year that Netflix, along with Amazon, Apple and Comcast’s NBCUniversal/Peacock, had expressed potential interest in a deal.
But it’s likely to be a long road ahead for Netflix when it comes to securing deals with the major leagues. According to Conway, many large sports service providers may not be willing to take a gamble on the company, especially if they know they already have high viewer penetration through other means. He added that it might not be a good idea for Netflix’s bottom line in the short term to get into a bidding war to rent content they don’t own and can’t reuse.
“I know everyone in professional sports, from a media perspective, has had conversations with the folks at Netflix,” Conway said. “The question is: What does each side want? And right now, I think there’s some gap, frankly, between what the current content providers, the NFL, the NBA, tend to offer, and what what Netflix is looking for.”
William Mao, head of media rights at sports and entertainment agency Octagon, noted that Netflix may not really need more traditional live sports offerings in the future. He said Netflix’s sports strategy so far has been smart, focusing on “the power of the individual.” He suggested the next match would be more about Tyson and Paul themselves rather than showing the “pinnacle of boxing”.
“The question has to be asked: why do they necessarily have to get into sports if they continue to be market leaders without having to invest in the traditional sense of the term?” said Mao.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
News Source : www.cnbc.com
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