Why Netflix Sees Live Events Rather Than Conventional Sport as Its Future

Netflix has recently pulled off a series of radical pivots: from rejecting to embracing advertising; from documenting sport stories to streaming live events – these are key strategic goals, offering both big appointment viewing audiences and advertising opportunities beyond the ad tier, executives believe.

Why Netflix’s live play matters

Sport is one critical (but very expensive) element of live viewing, one that Netflix has long been reticent to adopt. Now, however, with a combination of Christmas Day NFL games featuring a Beyoncé halftime performance, WWE wrestling next year, and the recent Tyson-Paul fight, Netflix is trying to carve out a space where it can achieve an “enormous live audience”. Or in the words of co-CEO Ted Sarandos, built around an idea of events rather than just sporting occasions.

“Those moments are rare and very, very valuable,” Sarandos told a UBS conference recently. “That’s why we’re kind of leaning into it. And I don’t think a season of league sports, the economic challenges aside, every one of those nights is not necessarily an event. And, really, I want to focus the live complexity and the live excitement on things that are truly events.”

While advertising remains a relatively small percentage of Netflix’s overall revenue mix, live occasions critically allow brands to speak to both ad-tier and full-plan subscribers, given the brand presence on screen during the event, not just in advertising breaks. Though still early days for these projects, and with some streaming issues to iron out, live presents a vital opportunity for the company.

What’s going on

In the advertising world, Netflix has been building its own back end following the launch of its adtech stack in Canada last month. Speaking at Adwanted’s Future of TV Advertising Global last week, Damien Bernet, vice president, EMEA advertising, said the company expected to roll out its adtech in the US in Q2 of next year and other markets likely to be added over the course of 2025.

The play, he said onstage, was to build for the long term, adding that “We need our own adtech platform to be able to innovate and be flexible enough to create new solutions for our advertisers.” Advertisers are asking for the flexibility of programmatic advertising, especially through their established partners, with major players like the Trade Desk and Google’s DV360. Integration capabilities, he added, will launch in February.

Already, the audience is significant. Citing Barb figures from the UK, which now include Netflix’s ad tier of around 7.2 million users, individuals spend around 19 hours a week engaging with the platform, while household-level engagement stands closer to 40 hours per week.

Globally, the ad tier has grown in its second year to around 70m users globally, up from 15m, said Bernet.

Prospects for advertising growth

Next year will see the return of some of the service’s biggest shoes, including the sequel to Squid Game and a new instalment of Emily in Paris, which it hopes will drive engagement further, but it’s the pivot to events that really excites the company.

Netflix now expects to reach advertising “critical mass” in 2025 if it can continue the 35% quarterly growth in monthly active ad-tier users, co-CEO Ted Sarandos told the UBS Global Media and Communications conference last week. It’s at that point the company believes it will become more relevant to advertisers across the markets in which it operates an ad tier.

The recent Tyson-Paul fight, whatever sporting qualms one might legitimately harbour, was a significant success. Bernet noted that the fight drew a global concurrent viewing high of 70m viewers and, over the course of the event, 108m uniques.

Sarandos also celebrated the “enormous” audience, adding: “You’d have to go back to the 80s to get a live audience that big that wasn’t a Super Bowl.”

So valuable, it appears, that Netflix believes it underplayed its hand. “If we knew the audience was going to be that big, we probably would have done a lot more selling on that fight,” Sarandos continued. “But I do think that our ability to monetize those events is very high.”

It’s not a mistake the company plans to repeat with its NFL Christmas games, which are now sold out of ad inventory.

“I feel like there is an emotional and somewhat irrational attraction to live for advertisers. It makes sense, really, because I do think people remember the events that they watch versus kind of the day to day [of] what they’re watching and paying attention to,” Sarandos added.