Streaming giant Netflix Inc NFLX has seen several phases growth. This includes partnering with other media companies on content before launching its own original series and movies. The company is now working on ways to diversify itself, which include video games, merchandise, licensing and live sports content.
What Happened: After years of being rumored to be bidding on sports rights and interested in entering the sector, Netflix appears ready for its first live sports streaming event.
The Netflix live sports event would feature members from “Drive to Survive” and “Full Swing,” the company’s docuseries about Formula 1 racing and PGA Tour golf, respectively. Athletes would compete in a celebrity golf event in an event set to air in the fall.
Netflix’s entry into live sports is set for a Las Vegas event, according to a Wall Street Journal report.
While the event is not finalized, it follows years of rumors and also comes after Netflix launched its first-ever live comedy special earlier this year, featuring Chris Rock. Benzinga previously highlighted the Rock special could be a testing point for Netflix before it gets into live sports.
The market for sports rights has heated up with several streaming companies and Netflix rivals landing big deals.
Netflix bid for the rights to Liberty Media Corp's FWONAFWONK Formula One in the U.S. last year before losing out to Walt Disney Co. DIS.
Netflix has been credited with boosting the growth of the sport in the U.S. thanks to “Drive to Survive.” The company has also bid on smaller sports rights like tennis and cycling events.
Amazon.com, Inc. AMZN has the rights to “Thursday Night Football,” a highly coveted weekly National Football League. The rights helped the company land more subscriptions for its Amazon Prime service and has the company considering launching an ad-supported version of Prime Video.
Apple Inc AAPL has the rights to some Major League Baseball games and became the exclusive home of Major League Soccer matches in 2023, a deal that may pay off huge with the announcement that Lionel Messi is coming to MLS later this year.
Rights to National Basketball Association games are up for bids next year and the league appears ready to offer streaming and traditional broadcast rights separately to attract more bidders. Netflix has been listed as a potential suitor.
Related Link: Netflix Q1 Earnings Highlights: Revenue Miss, EPS Beat, Ad Support Above Expectations, Guidance And More
Why It’s Important: Netflix has focused on cutting costs and new monetization efforts, which might put bidding on huge sports deals on the backburner, as it often comes with a high costs.
“We aren’t anti-sports, we’re pro-profit,” Netflix co-CEO Ted Sarandos said in January when asked about sports rights.
The celebrity golf event could be a way for Netflix to test the appetite for live sports events and also promote its existing sports docuseries. It could also serve as a way for the NBA and others to see what Netflix can do with live sports.
Celebrity golf matches have been featured across several networks previously with athletes such as Tom Brady, Aaron Rodgers, Patrick Mahomes, Josh Allen, Phil Mickelson, Tiger Woods, Peyton Manning, Stephen Curry, Brooks Koepka and Bryson DeChambeau.
The celebrity match featuring Mickelson, Brady, Woods and Manning had an average of 5.8 million viewers, becoming the most-watched golf event in cable television history.
The sports opportunity for Netflix could be huge and analysts may not have it factored into price targets and expectations given the company’s comments on profitability focus and shying away from big sports.
Alongside the potential of sports adding into the equation, analysts have been positive on Netflix’s password-sharing crackdown. New reports point to Netflix already seeing subscriber gains as a result.
Bank of America analyst Jessica Reif Ehrlich recently raised the price target on Netflix shares from $410 to $490.
Ehrlich, who had a Buy rating on the shares said the password sharing was tracking better than expectations in an update called “Sharing in the Upside.”
“We increasingly view NFLX’s crackdown on password sharing and the AVOD opportunity as inextricably linked,” Reif Ehrlich said. “The ad-supported tier provides an attractive low-priced option for ‘borrowers’ who still wish to access the Netflix service.”
Read Next: Netflix Lands First Partnership With NFL, How Patrick Mahomes, Kirk Cousins Factor In
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