Why Netflix Will Win in Sports

As Netflix prepares to air their first-ever NFL games on Christmas Day, the media giant continues to think strategically about its live sports strategy

Last week, The Information published an article titled, “Why Netflix Will Lose in Sports.”

Its argument basically goes as follows:

Buying live sports rights is exorbitantly expensive. Traditional TV networks like ESPN and TNT have no choice because sports are the only way left to drive mass viewers and ad dollars. But Netflix doesn’t need sports. Netflix already has a massive subscriber base and prints billions in free cash flow. By entering sports, Netflix will only pit itself against other media companies, overspend on rights, and struggle to achieve a positive ROI.

The article came right before a big week for Netflix’s sports strategy. On Christmas Day Netflix will broadcast its first-ever NFL games, which reportedly cost $150 million.

So I thought it’d be worthwhile to lay out the bull case for why Netflix could win in sports.

Small disclaimer: During business school I spent ten weeks working for Netflix’s content strategy team. As a summer intern I wasn’t quite Ted Sarandos’ right hand man lol… But I did see how Netflix evaluated content acquisition via a very strategic lens.

Now, from what’s reported in the news, I see Netflix applying that same strategic lens to sports.

Netflix is mainly targeting sports rights that are 1) under-monetized, and 2) high upside. Take a look at what they’ve bought to date:

• WWE: In January, Netflix acquired a $5 billion, 10-year package of WWE content spanning the US and international markets.

  • WWE might be a blue-chip property in the US. But the brand’s under-monetized abroad. In 2022, just 23 percent of WWE’s net revenue came from outside North America. Netflix is betting on tapping into a massive global audience that’s been under-engaged to date.

• Paul vs Tyson: In November, Netflix live streamed Jake Paul and Mike Tyson’s boxing match, produced by Most Valuable Promotions.

  • Many people have been hesitant to call Jake Paul’s fights pro boxing. But Netflix bet on the power of the Jake Paul hype machine. They clearly won the bet after #PaulTyson was the No. 1 trending topic worldwide on X, and 60 million households tuned in live.

• Women’s World Cup: Last week, Netflix acquired the rights to stream the 2027 and 2031 FIFA Women’s World Cup in the US.

  • The Women’s World Cup has historically lagged behind the Men’s World Cup in US viewership. The 2019 women’s final (which the US won!) averaged 16.9 million US viewers. The 2022 men’s final averaged 25.8 million viewers. But US women’s soccer has major tailwinds, from NWSL’s rise to growing girls soccer participation. By 2027 and 2031, Netflix could be set to capture all this momentum around American women’s soccer.

The NFL package definitely stands out as an expensive price tag for tier-one rights. But it’s worth noting that the Christmas package is a cost-constrained, time-boxed way to experiment and further relationships with the world’s most valuable sports property. Netflix’s NFL deal shows continued discipline in the short-term.

In the long-term, I also think Netflix could have a significant comparative advantage bidding for rights other media companies.

Netflix has 283 million subscribers worldwide. For comparison, Disney+ has 158 million and HBO Max has 99 million.

Netflix’s subscriber base offers an unparalleled engine to amplify any piece of IP. The Formula 1: Drive to Survive docuseries dramatically boosted F1’s fanbase in the US and worldwide. Since its release, every major sports property has rushed to produce a similar follow-along series with Netflix, from the NFL’s Quarterback to the NBA’s Starting 5 to the PGA Tour’s Full Swing.

Netflix is also building a cross-platform entertainment flywheel, similar to Disney’s original vision. Netflix is building out a consumer products division (e.g. selling Stranger Things merch); a live experiences division (with Disneyland-esque Netflix Houses); and a video games division (e.g. the popular Love Is Blind mobile game). Not to mention their growing ads division.

These initiatives are all in their early innings. But over time, Netflix’s subscriber base and flywheel could entice sports properties to work with them over other media companies.

In the meantime, I hope you enjoy the NFL’s Christmas Day games on Wednesday. And more importantly, I hope you enjoy the time with friends and family! I’m wishing you all a very happy holidays. See you in 2025!

-Aaron