Behind Netflix’s contrarian approach to live sports

Speaking Tuesday at the UBS Global TMT Conference in New York City, Ted Sarandos, Netflix’s co-CEO and chief content officer, made it clear that live sports won’t be coming to the streaming platform… probably ever.

This strategy marks a major departure from other big players in the industry, like Amazon, Apple, Disney, etc. Many of whom see live sports as a way to drive ad revenue and new subscriptions, while keeping existing subscribers engaged at the same time.

And then there’s Netflix, who believes bidding for sports rights just isn’t good business. Here’s a direct quote from Sarandos: “Netflix isn’t anti-sports, it’s just pro-profit.” He also believes the company has a higher ceiling without showing sports.

But why? Put simply, the streamer wouldn’t own the content it’d be shelling out big money for – it’d just be renting it. And when its hypothetical licensing agreement ends, Netflix would be forced to either fork over more cash to keep the rights, or let the programming go and take a big hit to its bottom line. Plus, this scenario also involves securing the rights in the first place, which isn’t exactly cheap. Amazon is currently paying around $1 billion/year just to broadcast the NFL's Thursday Night Football.

The obvious counter to this scenario would be to actually own all or part of the sports league being broadcasted – though that also has its obstacles. Amazon was reportedly interested in buying into NFL Media last year, though a deal never materialized. And per the WSJ, Netflix was in talks to purchase the World Surf League late last year, but the two parties couldn’t agree on a price.

🚫🔑 Zoom out: As Netflix, whose stock has dropped ~50% so far this year, puts more of an emphasis on profitability over growth, sharing apparently isn’t caring. A password crackdown is coming sometime next year, per Sarandos, so you can probably expect to hear from at least one ex in 2023.

• According to a 2019 study, Netflix loses upwards of $135 million/month – or $1.62 billion annually – due to customers sharing accounts outside of their households.