Netflix's Next Play: Live Sports Streaming

With an estimated 75 million U.S. subscribers, the Netflix platform holds a strong market presence, and its expansion into live sports puts the streaming leader in a new position to capture its next revenue streams through advertising and interactive experiences. Even with the introduction of ad-based services, Netflix holds high NPS comparatively to other major services.

Parks Associates data reveals that 40% of U.S. traditional pay-TV subscribers still rely on legacy pay-TV for live sports, largely due to existing rights agreements with network broadcasters and the fragmented online landscape. However, this trend is shifting, as only 22% of streaming users currently watch live sports—a number that continues to grow as sports rights transition to streaming services.

Streaming platforms are transforming the sports media landscape through aggressive acquisitions of sports rights, a trend that gained momentum in 2023 and continues into 2024.

Traditional pay-TV providers are losing their sports viewers and rights agreements, while platforms like Netflix, Amazon Prime Video, and Peacock see live events as a great way to attract and retain users. Parks Associates reports that 21 million U.S. broadband households watch live sports, underscoring the potential for sports programming to drive viewership and ad revenue.

One hundred eight million viewers globally watched the Netflix live-streamed Paul-Tyson fight and highlighted the massive opportunity and technical challenges of live sports streaming. Despite the record-breaking numbers, significant technical issues, including buffering and lag, led to customer frustration, refund demands, and even a class-action lawsuit. Netflix's experiment worked, though - and it will continue to build its live-streaming infrastructure as it readies for high-profile events like the Christmas Day NFL games tomorrow and WWE's Raw launch in early 2025.

Interactive video features, such as personalized commentary and real-time stats, represent a key engagement strategy for sports fans.

Parks Associates research shows that 79% of social platform users engage with video content. These consumers are used to integrated and interactive experiences and will expect this in live sports. However, the technical challenges of delivering seamless video streams remain a top concern. Parks Associates finds that 18% of sports viewers have experienced poor-quality streams, with lag and buffering being the most comment complaints.

For Netflix, the stakes are high, but they are well positioned.

Netflix will become a dominant player in the sports media landscape, leveraging its global reach and interactive features to attract advertisers and retain subscribers. It's important for Netflix to get the technical side right to ensure a great experience for both consumers and sports leagues, impacting future partnerships and revenue potential.

Netflix must be considered a trusted provider who can deliver the content successfully, so content delivery is of critical importance.

Netflix is banking on capturing a share of the 4.5 billion U.S. sports advertising market. As the platform continues its push into live sports, the coming months will be a critical test of its readiness to compete in this highly lucrative but technically demanding arena.

As always, we will track the consumer perspective and listen to the industry's response to Netflix's move into live sports.        

This is an excerpt from Parks Associates ates Streaming Video Tracker. For more information on our research and consulting, please visit www.parksassociates.com or contact me directly to meet with our team.