Netflix's new sporty outlook is on brand

Chris Pash
By Chris Pash | 31 January 2024
Credit: Joe Hernandez via Unsplash

Netflix’s move into live sports, with a big deal for professional wrestling, at first glance seems like an odd move for the streaming content giant more known for its deep archive than real-time.

But this move is all about advertising dollars, something which Netflix has turned to late in its product life after many years of saying: NO.

Advertising is now a YES and so is live sport . 

Just ask Australian broadcasters. Sport is a key focus for Nine Entertainment, holding Australian Open Tennis rights to 2029, NRL to 2027, and taking the Olympics from Seven last year for the next ten years.  

“Live sports brings in viewers and ad revenue as Netflix doubles down on wooing big brands to instead spend their TV budgets on Netflix’s growing addressable audience,” says analyst Mike Proulx, VP, research director at global consultancy Forrester. 

“A major sports franchise allows Netflix to offer big-ticket custom sponsorships.” 

Netflix reported a 70% lift in its advertising-supported subscription tier in the December quarter and forecasts "strong growth" in 2024.

The ads plan now accounts for 40% of all Netflix sign-ups in markets where the option is available.

And Netflix is focused on advertisers, making itself more attractive as a place to drop serious marketing budgets.

“... we have to build increasingly the capability to be better partners with advertisers and serve their needs,” co-CEO Gregory Peters said when briefing analysts.

“This is better sales teams, ad operations and just more capability to meet brands where they need us and how they need us. So we're focused on the long-term revenue potential here. We're very optimistic about it.” 

Netflix and TKO Group Holdings have closed a 10 year, $US5 billion deal for the streaming rights to WWE’s professional wrestling television program Raw starting January 2025.

Currently WWE programming is available via Foxtel’s Kayo and Binge under a 2022 deal, but that could change.

Initially Netflix will have the exclusive rights, starting January 2025, in the US, Canada, UK and Latin America. Howevfer, “additional countries and regions” will be added over time.

“We are excited to have WWE Raw, with its huge and passionate multigenerational fan base, on Netflix," said Netflix chief content officer Bela Bajaria. 

"By combining our reach, recommendations, and fandom with WWE, we’ll be able to deliver more joy and value for their audiences and our members. 

“Raw is the best of sports entertainment, blending great characters and storytelling with live action 52 weeks a year and we’re thrilled to be in this long-term partnership with WWE."

 Mike Proulx at Forrester says there’s no doubt that Netflix will benefit from its WWE deal.

However, this by itself isn’t a future-proofing strategy. 

“Live sports doesn’t lure Gen Zers en masse,” he says.

According to Forrester’s 2023 data, fewer than one in five of US online Gen Z adults (19%) “typically watch” live broadcasts (news, sports, or special events). 

Gen Z are least likely among all generations to report watching live sports. 

This holds for most mainstream sports, except for  basketball.

“But unlike other franchises, WWE is first and foremost an entertainment product that emulates sports — something that garners more universal appeal,” says Proulx. 

“This makes it ‘on brand’ for Netflix, which (at the end of the day) is an entertainment company.”

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