Wealthy entrepreneur Jerry Jones recently elaborated on why live sports are an optimal choice for Netflix. Could the streaming service's share price witness another surge?
Wealthy entrepreneur Jerry Jones recently elaborated on why live sports are an optimal choice for Netflix. Could the streaming service's share price witness another surge?
Netflix (NVDA -0.72%) attracted around 60 million viewers for the Mike Tyson-Jake Paul brawl on November 15th.
For a streaming service that has historically shied away from live events, this boxing spectacle serves as a strong indication that Netflix might be readying to change its stance.
Numerous viewers reported issues with buffering during the broadcast, as per DownDetector, a problem, but a good one for Netflix as it highlights the intense interest in the event, leading to technical strain on its infrastructure.
Ever since analysts questioned Netflix's potential interest in live sports, the platform has repeatedly denied these theories, citing its focus on long-lasting content that viewers can watch at their convenience. However, the words of Jerry Jones, the billionaire proprietor of the Dallas Cowboys, reveal why live sports could be a lucrative venture for Netflix.
Jones, interviewed during the event held in Dallas' AT&T Stadium, emphasized:
The world is now seeing Netflix. We in the NFL are thrilled about Netflix becoming a significant part of our future. This event gives us the chance to introduce ourselves to 40-50 million viewers without leaving our grounds.
Jones hinted at Netflix streaming two NFL games on Christmas this year and having at least one Christmas game in 2025 and 2026. This deal could potentially strengthen the partnership between the NFL and Netflix, and Jones exhibits palpable excitement at the prospect.
The global stage
Streaming live sports could make sense for Netflix, considering the worldwide expansion of sports leagues, which was not the case a few decades ago.
Leagues like the NBA and EPL in soccer boast global fanbases, and no platform is better positioned to connect viewers with these games and related content than Netflix, which now boasts nearly 300 million subscribing households worldwide.
The appeal of Netflix's subscriber base, particularly for American leagues, lies in its substantial non-American subscriber base. In Q3, Netflix counted 85 million subscribers in North America and nearly 200 million subscribers in the rest of the world.
The NFL, NBA, and MLB are eager to expand their global audience. They've resorted to staging games in locations like London and Brazil. But partnering with Netflix seems more strategically viable, as it would enable millions of subscribers worldwide to watch these games and potentially discover new fans. No other streaming platform can offer that kind of value or worldwide exposure to sports leagues.
A straightforward comparison
Entering the live sports market also presents an irresistible opportunity for Netflix, as its argument about focusing on long-shelf life, mostly scripted content, loses its validity.
One common criticism of Netflix is that its content often gets lost amongst its extensive library. Netflix may offer thousands of shows and movies, but its menu is designed to only display a handful of options.
The fact that the marginal gain of Netflix adding another true-crime drama or rom-com is insignificant contrasts notably with the potential impact of adding a new category like live sports. Live sports could tap into a new audience, engaging viewers who might not have previously considered Netflix and encouraging existing users to spend more time on the platform.
Netflix's next move
Netflix's positive momentum from its passionate sharing crackdown is starting to wane, and management has hinted that the advertising tier might take some time to make a significant impact.
Now could be an opportune moment for Netflix to explore new growth opportunities, namely live sports. It could provide a fresh avenue for the company to captivate investors, as its stock reaches new highs, but growth is beginning to decelerate, and there's a risk of a pullback if this trend persists.
Netflix could potentially capitalize on the success of the Tyson-Paul fight and the NFL games on Christmas and expand its sports content offerings. It might demonstrate challenging negotiations, but the reward could be substantial, as the cable landscape continues to fade, and audiences express a growing interest in sports on streaming platforms.
It's time for Netflix to seize the opportunity.
Investing in live sports could be a wise financial decision for Netflix, as it has the potential to attract a new audience and increase viewer engagement. The global expansion of sports leagues and Netflix's vast subscriber base make it an ideal platform for connecting viewers with these games and related content.
Netween the immense popularity of live sports and Netflix's large subscriber base, particularly its substantial non-American subscriber base, partnering with sports leagues could offer a lucrative opportunity for the streaming platform to expand its content offerings and reach new audiences globally. This venture could provide Netflix with a significant boost in its financial performance and help it maintain its growth momentum.