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Netflix Spikes the Football: Behind Its NFL Megadeal
In the last week of March, NFL officials and team owners huddled at the Ritz-Carlton in Orlando for the league’s annual winter meetings. The gathering is an important date on the NFL calendar, with changes often made to the rulebook and its media deals always a hot topic. This year, commissioner Roger Goodell revealed that with Christmas on a Wednesday in 2024, the league would be breaking out two games to play on the holiday, creating a new package that it could bring to market. It wasn’t long before Netflix reached out, according to Hans Schroeder, the NFL’s executive vp and COO of media.
“We spent a lot of time with them over the last now close to two months as part of our process — talking to everybody, but certainly a lot of time with Netflix — hearing how they think about sports on their platform, learning more about their platform, learning more about the reach learning about their capabilities,” Schroeder recalled, when asked by The Hollywood Reporter about the talks during an NFL press availability.
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The result of those talks were made public May 15, when Netflix and the NFL unveiled a three-year deal that will see the streaming service run live games on Christmas. It’s a remarkable pact, a blockbuster move in terms of Netflix expanding its push into sports and the league growing its group of media partners. But it’s also a modest one, limited to a small number of games acquired for a relatively bargain price.
Neither side commented on the cost of the games, but one source estimates to The Hollywood Reporter that this season’s pair cost about $75 million apiece. That would be consistent with what Netflix finance vp Spencer Wang told a MoffettNathanson conference shortly after the deal was revealed. “I would characterize each game as roughly the size of one of our medium-sized original films,” he said, adding that it would have “no impact on our operating margin guidance for this year.”
For Netflix executives, it was probably an easy call to make — two midsize movies or two NFL games, which not only have the benefit of a built-in audience of millions but also plenty of advertising breaks to grow that side of the business. For a company that has been laser-focused on engagement and time spent, the deal is only too logical.
JPMorgan analyst Doug Anmuth wrote May 15 that the deal “compares favorably” with those cut by Peacock and Amazon for their playoff and Black Friday games, respectively, each of which were estimated at about $100 million.
And while Netflix sources continue to insist that it is not in the live sports business — at least not in the sense of wanting giant long-term rights packages — the company is very much engaged in the live events business, an area where it has been building a regular cadence. The Netflix Cup and Netflix Slam exhibition golf and tennis matches were baby steps, with the recent Tom Brady roast building on that.
The upcoming Mike Tyson-Jake Paul boxing match “could be the most watched boxing match ever given ease of access and Netflix’s large global subscriber base,” Anmuth notes. And next year, Netflix kicks off its 10-year, $5 billion deal with the WWE for Raw, its closest thing yet to a long-term sports rights package.
“We believe today’s announcements show solid progress in the multi-year journey toward a scaled advertising tier, and highlight Netflix’s growing focus on differentiated live content,” Anmuth writes, adding that he believes it will drive both subscriber growth and ad revenue.
Or, as Netflix content chief Bela Bajaria said of the NFL deal: “Last year, we decided to take a big bet on live — tapping into massive fandoms across comedy, reality TV, sports and more,” Bajaria said. “There are no live annual events, sports or otherwise, that compare with the audiences NFL football attracts.”
If Netflix was crawling before, it appears ready to sprint now. Of course, not all analysts are quite as enthusiastic about the prospect. “We don’t think Netflix needs the consumer exposure that sports bring, though such a move would likely bring some incremental subscribers,” Morningstar’s Matthew Dolgin says. “We believe Netflix should avoid going down a path that could put it in a similar position as the legacy media companies, where it feels compelled to retain sports rights with costs that become an outsize portion of its content budget.”
Of course, at the right price, it is hard to ignore.
For the NFL, the deal with Netflix is multifaceted. For starters, the league has made global expansion a top strategic priority, with games this season being played in the U.K., Brazil and Germany. Netflix is the largest subscription streaming service in the world, with scale on nearly every continent. “It’s a global opportunity for us where I think we’ll speak to fans in a unique way,” Schroeder says.
And perhaps more importantly, it expands the number of rights partners for the NFL, a league where executives are obsessed with how technology is changing consumer habits.
“The technology is changing. The platforms are changing. The economy is changing. We have to be ahead of that strategy at all times so that we are where our fans are, on the platforms they want to be on,” Goodell told THR in a cover story last year.
In that context, the Netflix deal just makes perfect sense.
“I think one of the real successes and pillars of our success over time is to have multiple great partners — most of which have been our partners for a long, long time — invested in the NFL, partnered with the NFL and helping to build the NFL,” Schroeder says. “And in the midst of these deals, one of the things we always do … is keep some of our inventory to deploy strategically and make sure we’re thinking about where the future of media is going, where our fans are spending their time, and able to evolve and innovate in the course of these longer-term deals.”
It was that desire that led to the NFL’s blockbuster deal with Amazon for Thursday Night Football and the Black Friday game and with YouTube for NFL Sunday Ticket. And while a source says that both of those tech giants also were interested in the Christmas games, the appeal of Netflix and its scale was hard to escape.
While there was some grumbling from the NFL’s existing broadcast partners, the league believes that as long as it can deliver favorable schedules to those partners, it can exercise that optionality. Within that context, it is hard not to think about 2029 and 2030 when contemplating the Netflix deal. Those are the years in which the NFL has the option to opt out of its current TV deals, potentially bringing other packages to market. While it is far too soon to know how healthy the TV business will be, or how eager the tech giants will be for more games, it seems a strong possibility that Netflix and YouTube will have acquired a taste for the scale pro football can deliver.
During TV’s upfront week, every rights partner, from NBCUniversal and Fox to Disney and Amazon, used their presentations to tout the big games they were getting from the NFL this coming season.
In the final presentation of the week, just hours after the Netflix deal was unveiled, and just one hour before the NFL dropped its full 2024-2025 schedule, Goodell was on stage at Lincoln Center’s David Geffen Hall for YouTube’s Brandcast upfront event to tout the success of the league’s deal for Sunday Ticket.
The broadcasters all have reach, and indeed accessibility remains a key pillar of the league’s strategy (even the Netflix games will be available on local broadcast TV, in the markets of the teams playing). But it wants to make sure it is relevant to consumers that just don’t watch traditional linear TV. Amazon, Netflix and YouTube all serve that greater goal.
“I think the platform and the technology gives you a way to communicate with the fans we weren’t able to do in the past,” Goodell told the crowd of advertisers and buyers. “I think the creators bring a completely different perspective, and when they do that, I think it helps people enjoy the game more.”
But whatever the future holds, the deal marks a new era for Netflix, and for the NFL. One where the league no longer has a few toes dipped in the streaming waters, but seems ready to jump in.
And one where Netflix will get its first real taste of live sports, and if the engagement and viewership is strong, and if the ad money flows, it is something that the streaming giant will surely pursue further.
It’s a company that has never been afraid to pivot if it is in service of the audience, as its push into streaming and advertising underscores. “We started as a DVD company, mailing discs in the mail,” Wang said. “And now we’re doing Christmas Day NFL games, that’s kind of nuts if you think about it.”
A version of this story first appeared in the May 22 issue of The Hollywood Reporter magazine. Click here to subscribe.
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