Netflix-NFL deal is about 'prestige': Analyst

Netflix announced it will be the home of Christmas Day football games through 2026. Comscore Senior Media Analyst Paul Dergarabedian joins Catalysts to discuss the move and the streaming company's dip into the sports world.

"People will know where to go on Christmas Day, particularly those who are Netflix subscribers. And Christmas Day is typically a huge day for Netflix," Dergarabedian explains. As families gather together for the holiday, Netflix will likely get a spike in concurrent viewers interested in the big game, he notes.

This move, however, won't be Netflix's first sports offering. The company will be home to the highly anticipated boxing match between Mike Tyson and Jake Paul on July 20. In addition, Netflix signed a deal with WWE (TKO) to move "Monday Night RAW" onto the streaming platform.

"The immediacy of live events is what makes it such a draw for audiences," Dergarabedian says of sports programming. He adds that Netflix's move into live sports is about prestige: "It's about maintaining subscribers, adding new subscribers through the prestige and high profile nature of something like the NFL and NFL games."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video transcript

There's a lot of intrigue about the Christmas Day games.

One of the questions I have is whether or not it could be bad for the NFL that this sport is a little bit hard to find that people may not know where to find it on Christmas Day.

Is that a concern?

Well, I think, uh just the fact that we're talking about it now people will know where to go on Christmas Day, particularly those who are Netflix subscribers and Christmas Day is typically a huge day for Netflix.

People are home, they're with family, they, they open presents or whatever people are doing on Christmas Day and then they can sit down and watch Netflix, watch a movie, watch a television show together.

So it's very communal in that way on Christmas Day and have live NFL games on that very important and iconic day.

Uh is really huge, I think for the streamer, I mean, they have uh the boxing match between uh Mike Tyson and Jake Paul coming up on July 20 they're gonna have WWWWE raw uh in starting in January of 2025.

So really this foray by Netflix into live sports is, I mean, it, it is a game changer for the company.

And if you think about Netflix, how long they've been around and how we used to get the DVD S and then send them back in the mail.

If you had said to anyone, you know, te 1020 years from now that they would be uh hosting the NFL on Christmas Day, you would say really, how does that happen and think about all the original movies and series, they create reality programming, comedy specials that often go live.

So this live component uh for Netflix in all these different verticals is really in all these categories is really again, a game changer, Paul is this a sort of a big of a bigger push into live sports?

Absolutely.

I mean, it, it, and it live is very important as we all know in terms of sports, generally people don't time shift sports, they don't record it and then watch it a couple of days later when you can look at the internet and already or on social media and know the outcome, the immediacy of live events is what makes it such a draw for audiences.

And so I think to be on Netflix now, we're just before uh this happened or maybe just a few years ago, uh we would have thought you wouldn't think of Netflix or Amazon Prime who actually prime video who actually has uh Thursday night football there on, on that streaming platform that they would be part of the sports world, particularly when over the air broadcast.

Uh you know, some of those ratings are definitely going down and many people are going over the top and, and cutting the cord and watching all kinds of content on streaming sports is the natural next step in that evolution.

But Paul, how are these streamers, how should they be thinking about these investments into live sports?

Because they cost a heck of a lot of money.

We've seen the content spend be an issue here for so many of these names.

How do they walk that fine line where it makes sense, but it's not going to upset the shareholder here.

That's going to question maybe the returns that these streamers are going to see on this.

Well, that's a great question because if it doesn't make financial sense, well, then what is the, what is the upside for the streamers and for their investors?

I think what it's about too is prestige.

It's about maintaining subscribers, adding new subscribers through the prestige and high profile nature of something like the NFL and NFL games.

So while there might be a little short term pain, there could be a long term gain.

You know, this is a game of yards, not inches when it comes to these streamers and to have NFL football, I think it's a net win all the way around.

But, you know, time will tell as this space evolves in that streaming world.

So Paul walk through this situation with me here, Netflix launches the ad tier live content does well with ads.

So they get into sport that makes the ad tier subscriptions more profitable.

Does that mean that Netflix could end up axing the ad free option entirely?

Well, it's really interesting, I think for, for those of us who would prefer not to have the ads, even though some people like them, I think they have to have both.

And for those who choose to pay extra to be ad free, I think that option should always be there.

I think it'd be, it would create a weird perception or a strange perception on the part of the consumer if they go to a platform and it's, it has ads, it's ads supported in order to lower the cost the monthly cost or the yearly cost of that subscription.

So I think let's keep that option available to those who you prefer to pay a little extra not to watch those ads.

Well, uh quickly here, Paul, it's interesting because Nielsen dropped a media distributor gauge that I've been obsessed with all weeks.

It gives us and some intel about, you know, viewership across all platforms, including streaming.

Disney is the clear winner, but then you got youtube right behind it.

I'm curious about where youtube stands in the fight to get to become the winner of live sports content.

Where do you think they are at.

Well, I think youtube is always underestimated for some reason, I'm a huge, just full disclosure.

I love youtube.

I watch it all the time actually pay not to have the ads.

And I think that is a major player.

There are a lot of people who watch youtube, I think, look, this is kind of the new frontier for streamers, like youtube and obviously Netflix Amazon, all the very uh apple, all the various streaming platforms can benefit from streaming live sports.

Uh It, but it depends on what you're streaming, right?

Uh There are uh top tier sports and there are those that don't get as big a viewership, but youtube, I think could be, I, in other words, it's very fragmented on youtube, you get all kinds of content.

There could be, I don't know darts or you know, bowling, some of the full sports that those of us like uh that could be shown on youtube, I think in a way that could draw an audience and make it worth their while to put that type of content on the small screen.