May 16, 2024

Netflix Bets Big on Sports: Can $150M Per Game Win Over Live Viewers?

Netflix's $150 million per game sports investment faces challenges as viewers are unprepared for live events.

Netflix Bets Big

Netflix has finally done what everyone has been waiting for and invested significant money in sports:

It's a $150 million per game gamble and comes as Netflix refreshes its under-performing ad partnership with Microsoft (good tech stack, poor sales performance). Magnite should provide better support here.In theory, Netflix is a pipe, and content is content, so NFL fans should just tune in to watch the games, right?

Except Netflix has already tested live sports... and it ended with a whimper, not a bang. We looked at the Netflix slam (chart below) last month, which was an exhibition tennis match featuring two of the biggest names Nadal and Alcaraz.

Our conclusions were roughly this: Consumers were not prepared for live events on Netflix at all.

Viewing patterns were almost all delayed and contrasted sharply with typical NFL/football finals, where live (within 2 mins) viewership is typically 95%.

This is a problem, as big live-audiences have tremendous value for advertisers, better impact, better recall, better water-cooler moments - less people wandering off to make a coffee.

The act of delaying viewing, actually devalues the ad...A secondary conclusion was - It's really hard to build something new in sports without a supporting brand and that if Netflix is serious about sports, they should invest big, in (something like) the NFL and take the hit on the first few streams.