Netflix has made a significant foray into live sports by signing a groundbreaking 10-year, $5 billion deal with World Wrestling Entertainment (WWE). The streaming giant’s move into live programming comes as it seeks avenues for sustained growth beyond its core streaming offerings. The deal includes the rights to air WWE’s weekly shows and major events globally, marking a strategic move to tap into the loyal fan base and expand its content portfolio.
Why WWE and Live Sports:
WWE’s Broad Appeal: While WWE may not rival major American sports leagues, it boasts substantial viewership and brand awareness. WWE’s popularity on cable and its large fan base make it a valuable asset for Netflix’s expansion into live sports. The deal allows Netflix to capitalize on WWE’s strong following and fan loyalty.
Lack of Alternatives: The move towards WWE suggests that Netflix seized an opportunity where media rights were available. With major sports leagues locked into long-term deals, WWE’s availability allowed Netflix to signal its entry into live events programming. This move precedes potential interest in other major sports rights, such as the NBA, when opportunities arise.
Subscriber Growth and Market Message: Despite Netflix’s substantial subscriber base, the company is exploring avenues for continued growth. The ad-supported tier’s success, with 23 million subscribers, indicates a willingness to diversify revenue streams. The WWE deal serves as a strategic market message, reinforcing Netflix’s commitment to live programming and signaling its capability to compete in the evolving streaming landscape.
Live Sports as Subscriber Magnet:
Proven Viewer Attraction: Live sports consistently draw viewers, dominating television broadcasts. Streaming platforms recognize the value of live sports in attracting and retaining subscribers. Netflix’s move aligns with industry trends, where competitors like Amazon and Peacock have also secured live sports rights to enhance their offerings.
Creating Shoulder Content: Netflix’s success in producing supplementary content around sports, such as the Formula 1 series “Drive to Survive,” positions the platform uniquely. The potential for WWE-related content, including documentaries and miniseries, adds depth to the streaming experience and enhances subscriber engagement.
Ad-Supported Streaming and Economic Benefits:
Advertising Opportunities: Live sports provide ample opportunities for advertising during timeouts, halftime, and pre/post-game shows. Netflix’s move into live sports aligns with its ad-supported tier strategy. Live events create natural advertising breaks, presenting a lucrative avenue for additional revenue.
AVOD Impact: TKO Holdings president Mark Shapiro anticipates the WWE deal to be a significant impact player for Netflix’s ad-supported tier (AVOD platform). As subscriber numbers grow, so does the value of ad placements, creating a positive cycle for both subscription and ad-based revenue.
Conclusion: Netflix’s $5 billion WWE deal represents a strategic entry into live sports, positioning the streaming giant to compete in an evolving landscape. Beyond WWE, the move signals Netflix’s interest in live events programming, setting the stage for potential future ventures into major sports rights. The marriage of streaming and live sports, coupled with Netflix’s commitment to creating compelling shoulder content, could reshape the streaming industry’s dynamics in the coming years.
