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$5bn Netflix-WWE deal a ‘harbinger of what’s to come’ for live sports

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By Kendra Barnett | Senior Reporter

January 23, 2024 | 11 min read

Media experts suggest the partnership signals a broader departure from linear TV for sports and entertainment programming.

WWE Raw stadium

WWE Raw is coming to Netflix exclusively / Adobe Stock

Streaming giant Netflix has closed a 10-year deal worth more than $5bn for exclusive streaming rights of wrestling entertainment franchise WWE Raw. Announced on Tuesday, the move represents the platform’s largest-ever investment in live streaming and signals its growing interest in sports entertainment content.

The development comes at a critical juncture for Netflix. With new signups stagnating in a saturated market – where, in the US, 85% of households use at least one streaming service, according to recent data from analytics firm HarrisX – Netflix has adapted with password-sharing crackdowns and a free ad-supported tier.

Now, its deal with WWE Raw signifies that the company is also aiming to expand its content offerings and partnerships with brands that already command their own entertainment IP.

A win-win scenario

Media experts say that the deal hints at the industry’s recognition of the value that live sports and entertainment content offer viewers as well as advertisers.

“It’s a brilliant deal. Each partner gets a puzzle piece that they need,” says Lou Paskalis, chief strategy officer at media watchdog Ad Fontes Media.

For Netflix, that puzzle piece is WWE’s highly engaged fan base, which will bring more eyeballs to the streaming platform – eyeballs that can, of course, be monetized.

But another benefit for Netflix is WWE’s unique structure. While regular sports seasons might end after a losing streak, WWE Raw runs for 52 weeks out of the year and features a rotating door of wrestlers each Monday night. In essence, there are more consistent viewership opportunities, which can translate into more ad sales and higher subscription numbers.

And for WWE, Netflix’s unprecedented reach is the crucial puzzle piece. “Netflix is the world’s largest streamer, and WWE’s current distribution model on linear TV is an aging audience, and they’ve got a young product,” Paskalis says. “They’ve been propping up their linear distribution partners. But now, they can bring WWE into a whole bunch of markets where Netflix already is – it’s a new offering, it’s a discovery opportunity very similar to Formula One in the US.”

The deal has been compared to Netflix’s blockbuster Formula One (F1) program Drive to Survive, which has helped to greatly expand the sport’s fandom and score a windfall of advertising investment in the US market. Now, Netflix has the opportunity to replicate this success, fostering WWE fandom in markets outside of North America and engaging advertisers with valuable new opportunities.

As Kieren Mills, head of broadcast at media buying agency Total Media, puts it: “This move can tap into viewers who wouldn’t actively seek out WWE on other platforms or behind sport paywalls, potentially resulting in increased revenue from a global deal.”

It’s a sentiment echoed by other industry leaders. “From the WWE perspective, it has the opportunity to engage fans who don’t have access to content or create new audiences and a new generation of WWE fans,” says Mike Seiman, CEO and founder of Digital Remedy, a performance marketing company. “Streaming platforms attract younger, more tech-savvy audiences and this partnership puts WWE content right in front of these sought-after demographics by advertisers.”

A boon for advertising

The commercial opportunities of the new partnership are seemingly limitless. For one, fans of WWE are accustomed to consuming its programs on linear TV. This means they’re already used to watching commercials in exchange for access to the show, suggesting that they’ll slot happily into Netflix’s ad-supported tier. (Though with a storehouse of content to stream on-demand at any time, it’s likely that a large portion of fans will also be incentivized to pay for a Netflix subscription, driving additional revenue for the streamer.)

But it’s not just regular ad inventory at stake. “The deal also opens doors to ancillary revenue streams,” says Nick Cicero, an advisor, investor and consultant in the streaming space who founded social video analytics platform Delmondo before it was acquired by Conviva in 2018. Chief among these are event sponsorships and gaming partnerships, which could help further diversify Netflix’s revenue streams.

Furthermore, Netflix has countless licensing and merchandising opportunities with WWE because TKO owns the exclusive rights to its characters’ names, images and likenesses. This will enable brands to easily partner with WWE talent and may incentivize Netflix to create special content around the characters themselves, like behind-the-scenes or day-in-the-life-type series. It’s a win for everyone involved: fans get more content they love, WWE gains greater exposure and Netflix has more content to sell against.

And for advertisers, TKO’s ownership of WWE talent removes much of the headache normally associated with sponsorship deals. “The opportunity to integrate product in either shoulder programming or [an in-program activation] is easy because there aren’t convoluted rights holders,” Paskalis explains. “It’s not like music where there are all sorts of different profit participants – it’s straight between Netflix and WWE.”

For Netflix, the arrangement is likely to help it win over a wider swath of advertisers and diversify its revenue streams. Plus, as Digital Remedy’s Seiman points out, it will expand the company’s audience insights, which will reinforce its advertising effectiveness. “Better understanding of their content consumption behaviors will allow Netflix to create a better targeting model and give the company valuable insight into how to optimize its content strategy going forward.”

A sign of what’s to come

Experts we spoke with are in agreement that the deal is indicative of the broader direction of live sports and entertainment today. This kind of content has for some time been the last true holdout of traditional linear TV – live sports and entertainment programming attracts major ad spend and, in many ways, is keeping broadcasters afloat.

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As Paskalis puts it: “If network broadcasters lose sports, they have a questionable value proposition. What they’re trading on is, even though [viewership is] in decline, if you’re a major advertiser with a multi-billion-dollar budget, there are very few places you can really spend that budget. Linear has been able to significantly increase ad costs while [sustaining] a decline in inventory – in eyeballs. At some point, that is going to break. If you’re Marc Pritchard [the chief brand officer] at Procter & Gamble, you’re saying, ‘I can’t do this any more – I need a new economic model.’”

For live sports and entertainment organizations, the tides are already shifting away from traditional linear TV. Prime Video’s exclusive rights to NFL’s Thursday Night Football programming have raked in viewers and ad dollars. Comcast claims that Peacock’s recent exclusive stream of the Kansas City Chiefs-Miami Dolphins Wild Card playoff game on January 13, which drew 23 million viewers, was “the most-streamed live event in US history.” Meanwhile, Major League Soccer has teamed up with Apple TV to bring fans on-demand coverage of the sport. And while WWE Raw is not traditional sports content but scripted athletic entertainment, it aligns closely with this trend.

It’s a pattern that media leaders predict will only grow.

“As streaming services continue to diversify their offerings, securing exclusive rights to premium sports content becomes a strategic imperative,” says Tony Marlow, chief marketing officer at LG Ad Solutions. “Netflix’s foray into the world of wrestling not only reflects the growing demand for diverse sports content on streaming platforms but also signals a potential game-changer in how fans engage with and consume sports in the digital era.”

Marlow says the deal could “set a precedent for other streaming giants.”

Others, like Cicero, agree. “This deal could … influence other sports leagues to explore similar partnerships with streaming-only platforms,” he says.

In many ways, it’s just a matter of getting fans in the door – then, revenue-generating opportunities multiply. “These strategies, characterized by offering initial free content to attract subscribers and then upselling premium subscriptions, are proving effective in broadening the viewer base and revenue potential,” Cicero says.

In the end, Netflix is best poised to win the live content streaming race. Its market penetration is second to none and new partnership deals like this one will only bolster its position. “Compared with the other streamers, Netflix is bigger, more global, has an admired product … and while it has other near competitors, nobody is going to catch it,” Paskalis says. “I can imagine Peter Naylor, who runs revenue at Netflix, doing a cartwheel on this deal.”

In his estimation, the platform is using the WWE deal as a stepping stone in a larger plan to secure dominance in live sports and entertainment. “Netflix is biding its time, doing deals like this, building infrastructure and understanding how to market and monetize this – in anticipation of picking up a major league sport with exclusive live coverage.”

In any case, the deal signals what’s in store for live sports media. “This is the future,” Paskalis says. “Streamers are going to start to erode at sports – and while WWE is [more like] ‘scripted athletics,’ it’s a harbinger of what is to come.”

Netflix is set to announce its latest quarterly earnings this afternoon.

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