Netflix’s (NASDAQ:NFLX) unexpected agreement with the NFL for three seasons signifies a significant shift for the streaming giant, known for steering clear of conventional live sports investments.
As part of the deal, Netflix will broadcast two Christmas Day games: the Pittsburgh Steelers versus the Kansas City Chiefs, followed by a clash between the Baltimore Ravens and Houston Texans. Some analysts view this move as an experiment for Netflix, amid pressure to expand its offerings, particularly with the introduction of advertising tiers.
“I think this is much more about testing the waters, learning how to do advertising inside of sports,” commented Citi analyst Jason Bazinet, suggesting that NFL content may not necessarily bolster subscriber retention over the long term.
JPMorgan analyst Doug Anmuth believes the games will enhance Netflix’s ad tier and enable the company to actively promote its content during the broadcasts.
Netflix is expected to pay less than $150 million per game, with the partnership offering significant global distribution potential. Jefferies sees the deal as a positive move for Netflix’s emerging ad business.
“This would represent NFLX’s biggest foray into fully unscripted live sports content,” the bank stated, highlighting the deal’s attractiveness given Netflix’s prior investments in original movies.
Sports rights have become crucial for media giants as more consumers cut the cord, prioritizing access to sports content over traditional offerings. This strategic move into live sports reflects a natural evolution for Netflix, aligning with shifting consumer preferences towards immediate, live events.
While Netflix had previously focused on “sports entertainment,” it now ventures into live sports, representing a significant shift in strategy. This move is indicative of Netflix’s adaptability and its commitment to meeting evolving consumer demands.
In addition to the NFL deal, Netflix has announced partnerships to bring live wrestling and boxing events to its platform, further diversifying its content offerings and solidifying its position in the streaming landscape.
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