A few days ago, reports emerged that Netflix has signed a three-year deal with the NFL which allows the streaming giant to stream four exclusive Christmas Day games at $75 million per game in the next three years. The deal starts this year with two Christmas Day matches followed by one each in the next two years.
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Fans have been surprised since the reports emerged as Netflix hasn’t been a fan of live sports. However, the details of the deal show that it’s too good an offer to pass despite the $75 million tag. As per popular sports business analyst Joe Pompliano [via The Joe Pomp Show], the deal is a no-brainer for the streaming platform because Christmas Day games on average attract a live audience of 20-30 million.
“The $75 million per game price tag is roughly what Netflix would spend on a mid-tier movie. It’s also $25 million less than the $100 million Amazon paid for last year’s Black Friday game even though Netflix will probably get two times more viewers than the 10 million viewers they had on Amazon Prime.”
As per Pompliano’s assessment, considering there are around 100 ad slots in every NFL game, there is a possibility that Netflix might recuperate the $75 million before factoring in churn rate and new subscriptions.
“Netflix will charge advertisers hundreds of thousands of dollars for 30-second commercials and based on around 100 AD slots during each NFL game, Netflix might reach profitability before accounting for new subscriber signups and reduced churn.”
Back in December 2022, then Netflix CEO Ted Sarandos said that they are currently not into live game streaming because they are pro-profit and not anti-sports. What changed now? It’s the pre-programmed advertisements that are going to be a game-changer for the streaming giants.
Moreover, with the games pre-programmed with commercial breaks, it will be a big shot in the arm for Netflix as they have been working on new ad-supported offerings to scale revenue. But what about the NFL? Apart from money, is there anything to gain for the league?
NFL is The Biggest Winner in This Deal
Firstly, the deal helps the league earn an additional $150 million in revenue with just two games this season. However, despite the riches, what a league like the NFL lacks is global exposure. NFL is undeniably the biggest league in America in terms of size and revenue, but the numbers can be much improved in Europe and Asia.
Hence Netflix with a global user base of 269 million subscribers is a great way for the league to address the exposure issue. Moreover, the streaming platform has 82 million users in America and Canada itself, which is 10 million more than the NFL’s regular distribution partner – ESPN.
However, adding another distribution channel only adds to the subscription fatigue that many NFL fans have been complaining about. With the league having signed long-term TV deals just last year, fans fear that this Netflix deal doesn’t have a future. However, as Pompliano noted, the deals have a provision where the league can opt out of the contract after 2029.
Therefore, there is a real possibility that we might soon see the entire NFL scheduling migrate to streaming platforms solving the subscription fatigue and exposure problem in a single shot. The beginnings of such deals by Netflix can be seen with their recent $5 billion partnership with the WWE.
