Netflix CFO: Live Sports Builds ‘Appointment Viewing,’ as Streamer Eyes Possible WWE License Extension

On the heels of The Netflix Slam — the streamer’s second foray into live sports streaming that saw Spanish tennis stars Carlos Alcaraz and Rafael Nadal compete in an exhibition match March 3 at the Mandalay Bay Resort and Casino in Las Vegas — live sports, including professional wrestling, are entering Netflix’s so-called “field of dreams”.

Speaking March 4 at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco, CFO Spence Neumann said the move to live sports — including the $5 billion license deal with World Wrestling Entertainment for the weekly “Raw” live wrestling program, among other content, that begins in 2025 and other such deals — revolves around characters Netflix can showcase in its sports-centric original programming.

Neumann said the WWE deal could extend from 10 years to 20 years if the data points are met.

“We felt [WWE] is a kind of sports entertainment programing that is going to work well for our members in many parts of the world,” Neumann said, adding the streamer believes the deal will be accretive on subscriber growth globally.

“With WWE there’s hundreds of hours of live programming that’s kind of appointment viewing that will build our capabilities along with opportunities to make us better,” he said.

Whether this changes Netflix’s approach to possibly licensing professional sports leagues in the future, the quick answer is “no,” according to Neumann.

“I wouldn’t look at WWE as an indication as a change in our sports strategy, because it’s not,” Neumann said. “It’s right in that sweet spot of sports entertainment for us. What we call our sports shoulder, which around the drama of sports, the story behind the sports.”

Netflix’s sports-themed original content includes Formula One, WTA Tennis, NASCAR, the NFL, Tour de France bicycle race, PGA Tour, and an upcoming series revolving around the 100 Meter sprint event at the upcoming Paris Summer Olympics called “Sprint.”

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Neumann said The Netflix Slam in Vegas was a “vulnerable event” for the streamer as it enabled the service to showcase an aging legend (Nadal) against an upcoming star (Alcaraz) ahead of the Indian Wells tournament, beginning March 7 in the Palm Springs, Calif., area.

“That works for us…because our members love the programming,” he said. “So all that said, as [co-CEO] Ted [Sarandos] said in the past, we’re not anti-sports, we’re just really pro profit. And so if there are elements that make sense for us, we always look at it. But for us, we’re very comfortable of where we are in sports today.”

Netflix CFO: Ad-Supported Content Not on the Table — For Now

On the heels of rival subscription streaming video service Disney+ saying it would roll out a less-expensive ad-supported option this year, Netflix is not joining the growing bandwagon of SVOD platforms adopting ad-supported options.

Speaking March 8 at the Morgan Stanley Technology, Media & Telecom confab, CFO Spence Neumann said he doubted he would a do “show of hands” in favor of Netflix adopting an ad-supported streaming option. At the same time, the executive reiterated that the SVOD pioneer isn’t against the concept either.

“It’s not like we have religion against advertising to be clear,” Neumann said. “I mean, we’re focused on optimizing for long-term revenue, big profit pools. And we want to do it in a way that is a great experience for our members.”

Neumann said Netflix is currently about a $30 billion annual business, up 50% from $20 billion in revenue three years ago without advertising. During that period, the streamer added 28 million subscribers in 2019, 37 million in 2020, and 18 million in 2021.

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Disney announced it would launch an ad-supported Disney+ option as the company eyes at least 230 million to 260 million global subs and direct-to-consumer business segment profitability by 2024. Netflix ended 2021 with 222 million subscribers.

Neumann contends that an ad-supported plan is not in the streamer’s wheelhouse at the moment. Indeed, Netflix added 1.2 million North American subs in the most-recent fiscal period — the service’s strongest domestic sub growth in past three years.

“We think we have a great model in the subscription business,” Neuman said. “It scales globally, really well. Again, never say never, but it’s not in our plan, but other SVODs are learning from it. So, it’s hard for us to kind of ignore that others are doing it, but it now doesn’t make sense for us.”