11th November 2022

POV: Netflix Considering Investing in Sports Leagues

Background:

It is being reported that Netflix is considering investing in securing live sports rights for its streaming platform as it looks to find more ways to boost revenues and subscribers.

Details and implications:

According to a Wall Street Journal report, Netflix recently bid for the rights to the Association of Tennis Professionals (ATP) Tour in several European markets, including France and the UK, before eventually dropping out of the race and it is also reportedly contemplating bidding for the Women’s Tennis Association (WTA) Tour in the UK and some cycling competitions.

Having previously dismissed live sports rights as too expensive and fragmented with too short a lifespan to be of significant value, Netflix would appear to be broadening its content strategy from its usual approach of funding its own content.

Recent falling subscriber numbers and increased competition in streaming providers may have given Netflix reason to rethink its strategy, with the company said to be looking at buying stakes in lower-profile sports leagues that would not command a hefty premium - potentially avoiding the bidding war and escalating costs of bidding for premium sports rights. In fact, late last year Netflix was also in talks to acquire the World Surf League, but those negotiations fell apart.

Netflix believes its platform’s reach means it could elevate such lesser-known properties into big franchises and create new tournaments or events and match some of the success it has achieved with non-live sporting content such as the Formula One docu-series Drive to Survive and basketball documentary The Last Dance.

This potential move into live sports comes as many of Netflix’s streaming rivals have made significant investments for access to high-profile sporting events as they look to gain market share in a very saturated market, especially in the US.

Amazon’s Prime Video is now the home of Thursday Night Football, Disney and Liberty Media-owned Formula One extended their broadcast partnership last month (Netflix lost out on the bid for that), and Apple TV announced a partnership with Major League Soccer to stream every game for the next decade.

Sport is one of the few types of content that people still watch live, with viewers often tuning in for hours, making live sports an attractive proposition for advertisers. Committed fans of a particular sport often want to watch the full season, which could help stem customer churn by making platforms more sticky. This has become more important as consumers have been reviewing their subscriptions and deciding which to keep and which to do without against the backdrop of the broader economic environment.

Summary:

Netflix hasn’t felt the need to branch out into live sports, but it has struggled to add subscribers recently and has just launched an ad-supported service and is cracking down on password sharers to boost revenues and subscribers. A foray into live sports leagues could bring in an entirely new audience to the platform, and potentially make it more attractive to advertisers. However, sports rights are expensive, so Netflix’s approach is to be selective and we will have to wait and see which sports rights it feels have potential for growth.

Further Reading:

WSJ | Euronews | SportsPro

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