In a strategic move to broaden its content offering and delve into live sports, Netflix announced a groundbreaking $5 billion deal to acquire the rights to broadcast World Wrestling Entertainment’s (WWE) flagship weekly program, “Raw,” starting next year. The move highlights Netflix’s shift toward incorporating live programming, akin to traditional cable TV strategies, and sets the streaming giant on a trajectory to compete with traditional media while also intensifying its foray into the advertising business.
The deal allows Netflix to showcase WWE’s “Raw” along with other weekly wrestling shows, such as “SmackDown,” to its subscribers outside the U.S. This move, despite Netflix executives emphasizing a continued focus on entertainment, signals a significant step into the realm of live sports and events, placing the streaming giant in direct competition with traditional media.
While Netflix has been a dominant force in streaming video, its latest move mirrors a trend seen across the streaming industry. Amazon Prime Video, Apple TV+, Warner Bros Discovery’s Max, and other streaming services already offer live professional sports. The addition of WWE’s live wrestling programming positions Netflix to leverage the immediacy and viewer engagement associated with live events, complementing its extensive library of on-demand content.
Laura Martin, a senior analyst at Needham & Co., notes that the streaming landscape is evolving to resemble the cable bundle, with the inclusion of news and sports becoming essential for attracting new subscribers. The deal reflects Netflix’s recognition of the importance of live events in driving sign-ups and competing effectively in the streaming market.
The timing of the WWE deal coincides with a period where the streaming industry is approaching the ubiquity of cable TV, prompting Netflix to explore new growth avenues. Recent data shows that 85% of U.S. households subscribe to a streaming service. The industry also witnessed disruptions due to the Hollywood strikes, leading to increased cancellations of cable subscriptions and a surge in demand for more affordable streaming options.
Netflix’s pursuit of live sports aligns with a broader trend in the industry, where live events are becoming integral to streaming services’ offerings. The strategic move comes as Netflix seeks new avenues for growth, responding to challenges posed by the recent Hollywood strikes, which limited its access to licensed content.
Michael Nathanson, an analyst at MoffettNathanson Research, suggests that industry-wide challenges have allowed Netflix to reshape its content strategy. The company, once compelled to invest heavily in original content, now has the opportunity to explore different models, potentially revisiting its approach to original films.
Marc DeBevoise, CEO of streaming technology company Brightcove, notes that Netflix is effectively replicating the best of broadcast TV with a diverse collection of high-profile dramas, comedy specials, movies, and now, live sports entertainment. The addition of professional wrestling, a unique blend of sports and entertainment, offers millions of viewers each week, making it an attractive proposition for advertisers and aligning with Netflix’s ambition to make advertising a key revenue driver by 2025.
Netflix’s move into live sports is seen as a defensive strategy, allowing the streaming giant to match the breadth of live content available on rival services such as Warner Bros Discovery’s Max and NBCUniversal’s Peacock. By incorporating live sports content like WWE, Netflix aims to compete effectively with its streaming counterparts in a cost-efficient manner.
As the streaming landscape evolves, analysts anticipate that Netflix might explore more live events, although the streamer is unlikely to bid for costly sports rights. The WWE deal is viewed as a defensive move, ensuring Netflix remains competitive in offering a comprehensive content portfolio, including live events, to a global audience. The strategic shift not only positions Netflix to sell ads but also expands its demographic reach and global appeal, similar to the success achieved with sports-related documentaries like “Formula 1: Drive to Survive.”
In summary, Netflix’s foray into live sports through the WWE deal is a pivotal moment that reflects the changing dynamics of the streaming industry, emphasizing the importance of live events in capturing viewer engagement and driving future growth.
