Netflix Enters the Ring with WWE: A Major Live Sports Deal
The Curtain Raiser: A Bombshell Deal
On a bustling Tuesday in 2024, Netflix made a bold move, signaling a significant shift in its strategy. The streaming giant announced a groundbreaking 10-year, $5 billion partnership with World Wrestling Entertainment (WWE), a prominent force in the world of professional wrestling. This bombshell announcement coincided with the release of Netflix’s highly anticipated fourth-quarter and full-year earnings report for 2023.
The Anticipation and the Earnings Call
Ted Sarandos, Netflix’s co-CEO, had previously demurred on the topic of live sports broadcasts during the last quarterly earnings call in October. However, with Netflix’s stock soaring 40% since then, fueled by impressive subscriber growth, this year-end report and call had already generated considerable anticipation. In January, Amy Reinhard, Netflix’s ad chief, revealed that its ad-supported tier had surpassed analyst expectations, boasting 23 million subscribers, up from 15 million in November.
Despite the strong performance, some market analysts believed that the growth potential was already factored into the stock’s value, leaving limited room for further appreciation. However, the WWE deal signaled Netflix’s determination to seek growth in uncharted territories.
The Scope of the Partnership
Under the terms of the agreement, Netflix will broadcast WWE’s weekly flagship show, Raw, in the United States, the United Kingdom, Canada, and Latin America. In all other markets, Netflix will air not only Raw but also two additional weekly shows, SmackDown and NXT, along with all of WWE’s major showcases, including the iconic WrestleMania and SummerSlam events.
The WWE’s Perspective
WWE executives cited Netflix’s global reach as a pivotal factor in their decision to partner with the streaming giant. The WWE, owned by TKO Holdings, which resulted from a $21 billion merger engineered by Endeavor, saw its shares surge by as much as 24% in premarket trading before settling at a still impressive 15% gain.
The Significance for Netflix
Netflix’s foray into live programming, following its introduction of ad-supported tiers, is a natural progression for the media company, particularly given its dominant position in the streaming landscape. With nearly 240 million global subscribers and widespread recognition as the victor of the streaming wars, Netflix’s move into live programming was widely anticipated. However, the choice of the WWE as its first live sports partner raised questions.
Why WWE and Not Other Sports?
While the WWE might not have the same level of dominance in American sports fandom as the NFL or the NBA, it remains a ratings powerhouse on cable television. Raw, WWE’s flagship show, was the No. 1 program on its former home, USA Network, attracting 17.5 million unique viewers throughout 2023.
Surprisingly, the WWE boasts impressive brand awareness, with 82% of Americans acknowledging familiarity with the organization. As of June, WWE had amassed a fan base of 90 million, according to market research firm SSRS/Luker, as reported by The Hollywood Reporter.
WWE Fans: Loyal Subscribers
Data from Antenna indicates that WWE fans tend to be more loyal subscribers than the average viewer. This loyalty is likely attributed to the WWE’s compelling storylines, larger-than-life characters, and captivating spectacle that has captivated audiences for decades.
The Big Picture: Netflix’s Future in Live Sports
The WWE deal represents a strategic move by Netflix to expand its offerings and cater to diverse audiences. With its global reach and loyal fan base, the WWE provides Netflix with a strong foundation to establish itself in the live sports arena.
This partnership could potentially reshape the landscape of live sports broadcasting, challenging traditional models and introducing new possibilities for fan engagement. As Netflix continues to navigate the ever-evolving media industry, the WWE deal signals its willingness to embrace new opportunities and redefine the boundaries of streaming entertainment.