Netflix’s announcement this week that it will soon be the new home of World Wrestling Entertainment’s weekly live show, Raw, is one of the latest signs of the shifting environment of sports media rights.
The 10-year rights deal—which Reuters reported was for more than $5 billion—enables the streaming giant to tap into a massive live sports audience.
“Our partnership fundamentally alters and strengthens the media landscape, dramatically expands the reach of WWE, and brings weekly live appointment viewing to Netflix,” said Mark Shapiro, president of WWE’s parent company TKO Group Holdings, in a press release.
For many streaming companies and sports entertainment companies, the potential to cultivate a new revenue source and reach a wider audience may be especially crucial at a time when consumers are expected to dial back spending, as we wrote last year.
Subscription-based video platforms continue to disrupt the conventional cable TV model. Nearly 85% of U.S. households subscribe to at least one streaming service, reflecting its prevalence in the market.
As the streaming industry matures, there has been a notable shift in focus from sheer user growth to prioritizing profitability. While subscriber still play a role and attracting and retaining subscribers is crucial for any streaming platform, subscriber numbers cannot be the sole barometer for success.
Achieving profitability in the streaming sector involves more than just growing subscriber numbers. Saturation in the media industry poses a challenge, making it increasingly difficult for companies to expand their user counts and highlighting the necessity for a more comprehensive approach.
Diversifying content strategy
To address the competitive landscape, counter customer churn and strive for profitability, many streaming channels are diversifying their strategies so as not to rely too heavily on subscriber numbers alone. This includes placing a heightened emphasis on advertising, implementing consumer price increases, and promoting content diversity. The content war persists, marked by a year-over-year escalation in content spending, a strategic move aimed at ensuring subscriber satisfaction. Data from Ampere Analysis forecasts a 7% increase in content spending across all streaming channels in 2024. As consumers transition away from traditional TV, streaming channels must adapt to remain competitive and embrace content diversity to cast a wider audience net.
In this dynamic landscape, sports and live entertainment, exemplified by live events like WWE, play a crucial role in attracting both consumers and advertisers. The appeal of such content diversity, outside of shows and movies, not only draws in viewers but also aligns with the streaming channels’ pursuit of profitability.
Ad spending is another factor at play. Ad revenue for traditional TV has declined in recent years, while non-traditional channels, particularly streaming services, have experienced a surge in ad investment. This reflects the evolving preferences of advertisers, emphasizing the increasing importance of digital platforms in reaching and engaging audiences. If more live sports events move to subscription-based streaming platforms, that will continue to open up new revenue opportunities for companies.