Nolte: Netflix Looks to Live Sports to Boost Growth

As Netflix’s growth stagnates and its stock price collapses, the streamer is looking to boost its growth by adding year-round live sports to its programming.

There are reports that Netflix is in talks with Fox One to bring its “live sports programming onto the platform.” There are also rumblings that once Comcast separates itself from NBCUniversal, Netflix will gobble it up primarily to gain access to its year-round sports contracts.

“To matter to a sports fan, you need a year-round offering, not just a season. If you have just a season, people can cancel,” Wolfe Research analyst Peter Supino said on a recent podcast. “We think it’s a very underappreciated possibility that Netflix ends up buying NBCUniversal, which is the second-biggest sports portfolio in the world.”

NBCUniversal “is almost nowhere in the scripted entertainment business. Despite NBC’s rich history in television, most people would struggle to name anything in the category of Peacock originals or big scripted dramas,” Supino added. “Peacock finds itself a sports business, a news business, and a pay-one film deal with Universal Studios, and that’s just not enough.”

Netflix eventually lost out to Skydance, but lobbied hard to purchase Warner Bros. Discovery (WBD) earlier in the year. For whatever reason, though, Netflix only wanted the WBD entertainment assets. Not the sports or news assets. At the time, this was seen as a mistake — a move by Netflix to purchase more of the same instead of a necessary programming expansion.

Yes, Netflix remains profitable. Netflix is even managing to grow each quarter. The problem is that its growth rate has slowed and it is losing viewership time to YouTube, a free service. Currently, YouTube is number one in TV viewing with 14 percent of that share. Netflix is a distant number two with around seven percent.

This matters because a streaming service that doesn’t hold on to its viewers will eventually lose subscribers. Wall Street closely watches the amount of time people spend watching a streamer as a look into the future of a streamer’s subscription health. Right now, Netflix’s future isn’t looking so healthy.

Netflix has already broadcast some live sporting events and has Monday Night Raw with the WWE. What it really needs, though, are the seasonal sports that spread across an entire year. Outside of sports, Netflix could also use a daily television show people tune in to watch without really thinking about it. Something like a Wheel of Fortune or a genuinely good news program.

There’s also talk of Netflix getting into the theatrical business. Until now, Netflix has only grudgingly put its movies into theaters. The motto has been, We’re a streaming service. That might change. Why, I don’t know. Theatrical is not a growing business. What’s more, each feature is a massive $300 to $500 million gamble.

Either way, Netflix is not yet a company in trouble, but trouble is on the horizon unless something changes.