How Netflix Wins the Sports Media Bidding Wars Without Participating

Plus the Die Hard with a Vengeance Analogy You've Been Waiting For

First: Go New York, Go New York, Go

It’s no secret that live sports are propping up the linear TV economy. Football alone (mostly NFL) accounted for 93 of the top 100 individual broadcasts of 2023. And while ratings are declining for most sports (besides the NFL), they’re not completely crumbling like pretty much everything else on linear TV. So it’s no surprise that legacy media companies are so thirsty for sports rights they make Joe Namath lusting after sideline reporters look suave and aloof. (Here’s a useful overall explainer of the sports rights landscape in the U.S. )

Any day now we will learn the winners of the bidding war for the NBA’s broadcasting rights. Based on current reporting, it seems that ESPN and Amazon have already locked in 11-year deals, and now NBCU and Warner Bros Discovery (WBD) are battling it out for the final package, which will cost at least $2.5 billion.

While both the winners and losers of the NBA rights are focused on the immediate future (the next ten years), we’re also seeing the seedlings of how the sports (and live programming in general) landscape will evolve in that time and beyond. We can look at the future through both a business and human lens.

The Business View

The legacy companies (Disney, NBCU, Paramount, WBD, Fox) are stuck in a purgatorial period between media systems, trying to wring out the massive but rapidly declining profits of the linear age while transitioning to the sports streaming era. It’s like that puzzle in Die Hard with a Vengeance where Bruce Willis and Sam Jackson must move exactly the right amount of water from one jug to another, or they’ll get blown up.

The tech monsters (Amazon, Apple, Netflix) don’t have the same worries but can’t deliver the built-in scale of broadcast.

Which is why, on the other side of the negotiating table, every sports league faces a choice between maximizing scale or maximizing revenue as they determine their media partners. MLS dramatically sacrificed scale by granting Apple exclusivity in exchange for $2.5 billion. The NFL and NBA still put a heavy emphasis on broadcast reach in their current deals, for good reason. As an example, viewership for Monday Night Football increased 29% between 2022 to 2023, while the league ratings in general only increased 7%. The driving force? Every Monday night game aired on both ESPN and ABC, unlike previous years when only a handful were put on the broadcast network. This means that many viewers watched it because it was on a channel they happened to tune into.

Can live events replicate the same success when they fully detach from the linear ecosystem that drove their dominance in the first place?

In absolute terms, the answer is a firm No. There’s a simple reason for this: human mortality. Much of the audience who contribute to the automatic bump sports get from being on broadcast TV are older than Trump or Biden—they won’t be around by the time the current rights are up for renewal. But their eyeballs (and the associated retransmission and advertising dollars) are relevant now, so today’s bidders are forced to pay current value.

This is great news for Netflix. It doesn’t make sense for them to pay fees that are still based (at least partly) on consumers who are going to tune into whatever’s on the channel they left on when they last turned off the TV.

Instead, they are experimenting with one-off specials, home-grown events (more on that in a bit), and younger skewing live programming like WWE, while watching their linear competitors outbid each other. The tens of billions of dollars being committed by the legacy companies will mean less money spent on other entertainment formats, and more trouble paying down their mountains of debt. By the time the next round of major sport rights come up for bid, and the overall sports rights market is reset for the streaming economy, Netflix will be waiting with way more cash AND way more scale than anybody. And importantly, that scale will be global. So, as the NFL and NBA both look to grow international popularity, come 2033, their only option to capitalize on that growth might be Netflix.  

One last business note: the biggest loser of the NBA auction might be MLB. They already took less money from ESPN in their last renewal, and their rights are next up after the 2028 season—at which point there will have been further consolidation (fewer bidders), two of their current rights holders might be joint owners of Spulu (even more fewer bidders), and the real value of streaming-centric sports distribution will be much clearer.

The Human View

What is it about live events, and sports in particular, that holds such power to withstand or delay the viewership declines of every other mass media? Is it the sense of togetherness—visual proof that we’re not alone despite our isolating media ecosystem? Is it FOMO—insurance against not being able to have participated in a potential magical/crazy/horrifying moment? Is it biological—the unpredictability of live shows delivering the same anticipatory dopamine as the platforms’ endless feeds?

It's surely a combination of all these factors and more, but there’s a tension between the pre-eminence of “live” and the drive for more personalized content and experiences. As we’ve seen in all the major platforms aggressively pivoting from chronological to algorithmic feeds, there’s more money in delivering exactly what someone “wants” than in showcasing what’s happening at the moment.  Twitter’s ongoing demise (don’t believe a word—or a number—that Elon Musk says) and the lack of platforms trying to fill the gap in “real-time” relevance will mean even less interest in “live.”

As we head towards this future, the respective appeals of “sports” and “live” will be decoupled, creating many more moments for each, all at much smaller scales.

In the sports realm, as our consumption becomes fully digitized, fans will have more choices for satisfaction of their competitive urges. The love of sport doesn’t equate to the love of all sports, so some consumers who currently default to the NFL or NBA now might discover they love IPL cricket or women’s rugby or horse jumping. The storytelling around sporting events will be paramount in driving interest, ranging from the packaging of highlights to the creation of drama in the buildup to and fallout from the actual games. (League commissioners can learn some things from the Kendrick/Drake diss war.) We will also see even more alternate streams, as leagues and broadcasters try to make up for the loss in passive viewers by enticing new viewers through added relevance.

At the same time, the immediacy of shared moments will continue to drive engagement (and more natural places for advertising breaks), so the media companies will attempt to manufacture live events. Once again Netflix is driving towards this future with things like Tom Brady’s roast, the Tyson v Douche fight, that tennis tournament that nobody watched, and John Mulaney’s surreal week of live late-night shows.  I can easily imagine a future in which Netflix airs 3-4 live events per night, deepening the habit of people opening the app to “see what’s on Netflix.”

The Longest-Term View

While Netflix is set up for the greatest mid-term success, there will come a time when the disruptors become the disrupted. Imagine 10 years from now, as Apple tries to renew its MLS deal, they are forced to give up a portion of the package called “scrolling rights”—TikTok style in-stream live video being produced not by professionals, but dozens of fans at the game, who offer a totally unique viewing angle and custom commentary.

The consumption of sports was once exclusively audio before the advent of TV, a wholly new medium. While streaming is at the heart of today’s rights negotiations, it’s still that same TV medium delivered through different pipes. The long-term winners (among both leagues and media companies) will be those that recognize the medium itself needs to change.

The Marketers’ Prompt(s)

As the sports viewing experience becomes more fragmented, what can we do to relieve friction for fans?

Is there an up-and-coming sport that our consumers are moving towards that we can sponsor and grow with?

This Week’s Whimsies

One genre that can occupy a lot of live event media is stand-up comedy, which is BOOMING.

Nick Hornby has launched a newsletter, which is a recommendation unto itself, but as someone who likes putting words together to be read by other people, I love this piece about how he found his voice by discovering female writers.

This interview with writer Megan O’Gieblyn, who is an essayist and Wired’s advice columnist, is titled “Consciousness, Creativity, and Godlike AI” and it’s best saved for when you want to think deeply.