Netflix's (NFLX) surprise three-season deal with the NFL marks a major shift for the streaming giant, which has historically shied away from investing in traditional live sports.
As part of the deal, the platform will stream two games on Christmas Day: the Pittsburgh Steelers vs. Kansas City Chiefs, followed by the Baltimore Ravens vs. Houston Texans.
Some on Wall Street say the move is an experiment for Netflix, as streaming platforms are under pressure to expand their services, especially amid the recent introduction of ad inventory. Looking.
“I think this is more of a test of the waters, learning how to advertise within the sport,” Citi analyst Jason Bazinet told Yahoo Finance, adding that the NFL believes streamers are in the long-term argued that it does not necessarily help retain subscribers.
“Down the road, [Netflix will] “They will probably bid for more sports rights and promote more advertising,” he speculated. “I think that's a good thing. It's just a natural evolution of the business.”
The deal comes as the NFL continues to add more streaming services as media partners. The list also includes Amazon's Prime Video (AMZN) and Comcast's Peacock (CMCSA). Google's YouTube TV (GOOG, GOOGL) also has exclusive rights to NFL Sunday Ticket, which makes out-of-market games available to fans across the country.
JPMorgan analyst Doug Anmuth said in a note to clients that he believes games will boost Netflix's advertising space and allow the company to “aggressively promote” its own content during games. Stated.
Netflix will reportedly pay less than $150 million per game, according to Bloomberg, but Anmas said it will also bring massive global distribution to the NFL.
“Last year, the NFL's three Christmas Day games ranked among the top 25 most-watched television programs of 2023. “We believe NFLX can deepen its relationship with the NFL and look forward to seeing more live sports coverage in the future,” he wrote.
Jeffries agreed, writing in a research note following the news: “We remain positive about the NFL deal and believe it creates an attractive value proposition for NFLX's emerging advertising business.”
“This will be NFLX's largest foray into completely unscripted live sports content,” the bank said, adding that the company has previously made similar efforts to original films such as “The Gray Man” and “Red Notice.” He said the terms of the deal were “very attractive” given the amount of money he had spent. ”
“Live sports is a game changer”
Sports rights are becoming increasingly important to media giants as more consumers cut the cord. This content is considered “sticky” and loyal viewers are willing to pay a monthly fee for a cable or streaming service to access sports over other types of content. means.
“Netflix's move into live sports is a game-changer for the company,” said Paul Dergarabedian, senior media analyst at Comscore. “The immediacy of live events is what draws viewers in. …Many have already gone too far, cutting the cord and watching all kinds of content on streaming. It's a natural next step.''
Netflix has previously said it wanted to focus on “sports entertainment” rather than pay broadcast rights fees for live sports, which can be expensive for media companies.
In the past, the company has hosted live sporting events like Netflix, as well as documentary series and shows like “The Quarterback,'' “Formula 1: Drive to Survive,'' “Full Swing'' and “Break Point.'' We have released sports-related content such as. The celebrity golf tournament “Cup” was broadcast at the end of last year.
One recently announced partnership seemed to depart from that status quo. In January, Netflix announced a 10-year contract with WWE (TKO), a subsidiary of TKO Group Holding, which will bring WWE's flagship live pro wrestling show “Raw” to its streaming service starting in 2025. .
The company also announced that it will be live streaming a boxing event between YouTuber Jake Paul and heavyweight champion Mike Tyson in July.
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, Email alexandra.canal@yahoofinance.com.
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