The Rundown - Deep Dive: Why Live Sports Are the New Battleground in the Streaming Wars

Episode Date: December 29, 2024

Streaming platforms are waging a high-stakes battle for live sports, reshaping the future of media. From Netflix's record-breaking NFL Christmas debut to Amazon’s exclusive Thursday Night Football deal, Big Tech is going all-in on sports. This episode digs into how live sports drive subscriber growth, YouTube TV’s rise as a sports powerhouse, and the tension building between Amazon and incumbent media brands. Listen in for an inside look at why live sports have become the ultimate prize in the streaming wars.Follow our new Instagram account⁠⁠@TheRundownDailyThe content of the video is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures.Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Welcome to another weekend deep dive episode of the rundown. Today, we are talking about a big shift happening in the entertainment industry. Streaming companies are taking over live sports. Up until recently, streaming companies had been focused on original movies and TV series. Well, now companies like Amazon, Google, and even Netflix are spending billions to claim a stake in live sports, leaving legacy media companies scrambling. So why are live sports, especially the NFL? the new battleground for streamers,

and what does it mean for the future of sports media? That's what we're going to talk about today. Let's break it down. Let's start by talking about how popular sports programming is in America. Because Americans love to watch sports. According to the Sports Business Journal, in 2023, 96 of the 100 most watched programming on TV were live sports, with NFL games taking up 93 spots on that list.

So Americans love watching sports, and that doesn't seem to be slowing down. In fact, the percentage of households watching sports continues to grow. And sports is just one of the few things these days that you kind of have to watch live to get the full effect. Which is why live sports has become a reliable way to bring in viewers. And I think streaming companies have taken notice. According to the analyst firm Antenna, five sporting events in 2024 drove over a million new signups for streaming platforms within a three-day window of that event. Like Paramount Plus added a record 3.2 million subscribers because they live stream. streamed the Super Bowl. Peacock added more than a million subscribers three different times,

two of those being NFL games and one being the Summer Olympics opening weekend. And even Netflix, which famously avoided live programming for years, had a breakthrough moment this year with the Jake Paul Mike Tyson fight. That single event brought in 1.4 million signups for Netflix, which is the single largest acquisition moment for Netflix since Antenna started covering the sector in 2019. So the data is showing that live sports is a way for these streaming platforms to attract and retain subscribers. And the crown jewel of that is the NFL. Amazon Prime, Peacock, and Netflix make all the headlines with flashy deals for exclusive NFL games, but I think a sneaky winner might be YouTube TV, thanks to NFL Sunday ticket. The Google

owned platform secured exclusive rights to NFL Sunday ticket in 2023, taking it away from DirecTV, which had it for like two decades. And see, NFL Sunday ticket is a must-have service for die-hard NFL fans because it gives access to out-of-market games that you wouldn't normally see. And it looks like the NFL Sunday ticket is leading to big subscriber growth for YouTube TV. Now, before I get into the numbers, let me just back up a second and talk more about what YouTube TV is. Because it's known as a virtual multi-channel video programming distributor, or VMVPD for short. Basically, it's a cable bundle subscription delivered over the internet and not through a cable box. And YouTube TV has quietly turned into a juggernaut.

It currently has 8.5 million subscribers. I am one of those people. And it's seeing huge growth. In fact, just two years ago, they only had 5 million subscribers. So that is very impressive growth for this service. And to give you even more context, YouTube TV now is the third largest paid TV service in the U.S. behind only Comcast and Charter.

And it's the largest VMVPD by far. The next largest is Hulu with 4%. 4.4 million subscribers. So YouTube TV has almost double. And a significant part of that growth might be driven by sports, specifically NFL Sunday ticket. I mean, just looking at the start of this NFL season, YouTube TV won a 48% share of new VMVPD signups in September. That's up from 33% in 2022 before they had NFL Sunday ticket. So they're building on their lead against their competitors like Hulu, Fubo, and Sling TV. And just outside of YouTube, YouTube TV, the main YouTube app has become more popular on TVs.

Thanks to the rise of smart TVs, people are just opening up the YouTube app and watching videos there. I mean, I do this all the time. I think for a lot of people, YouTube is TV. YouTube recently reported that total daily viewing via a TV set reached one billion hours. And that viewing time of sports content jumped 30% compared to last year. So people are watching sports highlights on YouTube on their TV. You know what's crazy though? despite YouTube TV's dominance, YouTube TV only accounts for around 3% of Google's total revenue.

But Google is hoping to increase those revenue numbers because the price of YouTube TV has gone up over the last few years. When I signed up back in 2020, it was $65 a month. Then they raised it to $73 a month back in 2023. And they just announced that the price will be jumping to $83 a month starting in January. I guess those NFL rights aren't cheap. So I wonder if that's going to hurt their growth moving forward. All right, now let's talk about Netflix.

For the longest time, Netflix said they weren't going to get into live programming. Well, they changed their mind recently, and they've been dipping their toes into live streaming, and it looks like it's working out pretty well so far. They broadcasted their first NFL game on Christmas this year, and it ended up shattering records in the process. Now, some people were skeptical that Netflix could pull this off because of all the issues during the Jake Paul Mike Tyson fight back in November. People had to sit through a blurry broadcast that was constantly buffering.

But despite all those technical issues, Netflix reported that event, peaked at 65 million concurrent streams. And it looks like Netflix learned their lesson from the Jake Paul Mike Tyson fight and delivered a solid NFL broadcast on Christmas Day. With no technical issues, the games on Netflix reached 65 million US viewers, according to Nielsen's. The two games they broadcast were the most streamed NFL games ever. The first game on Christmas Day was Chiefs versus Steelers. It averaged 24.1 million viewers, while their second game, Ravens versus Texans, was slightly higher at 24.3 million. Those are very impressive numbers, especially given the fact that both those games

weren't very competitive. And viewership peaked to 27 million concurrent viewers during the half time of the Ravens Texans game when Beyonce was performing. Netflix reportedly cut Beyonce a big check for the concert, which was on top of the $150 million it paid to the NFL to broadcast these games. And it's the first of a three-year partnership between the NFL and Netflix to stream games on Christmas Day. And to me, they're showing everybody that they can dominate even when it comes to live broadcasting. You know, it's funny, Netflix said they would stay out of live sports, which is also what they said when it came to doing original programming. Netflix had previously said they wanted to remain a distributor of content instead of a creator of content. And then in 2013, they changed their mind

and released their first original series, The House of Cards. It was an instant hit, and it made Netflix a respected player in the entertainment industry and also a creator of original programming. I want to talk about Amazon as well, because Amazon was a early mover in the space, especially dealing with the NFL. Amazon is technically the league's only official streaming partner, thanks to an 11-year deal they signed with the NFL back in 2021 for rights to Thursday night football. Viewership numbers for Thursday night football have been pretty impressive. In fact, they're up 36% from their debut year in 2022 with an average audience of 13 million viewers per game. I think one reason for that is that Amazon has benefited from the NFL scheduling higher

quality matchups for Thursday night football. You know, in the past Thursday night games haven't been the best, but they've gotten better recently. It's funny. Cable's TV executives actually suspect the NFL might be favoring Amazon a bit to strengthen their bargaining position ahead of 29 when the NFL is expected to renegotiate their current media deals. I mean, not only is Amazon getting better matchups, but they're also paying less than major cable companies. Amazon pays the NFL $1 billion annually for its rights, while CBS, Fox, and NBC each paid $2 billion, and ESPN pays $2.7 billion for the rights to Monday night football. I think another reason the NFL might be favoring streamers like Netflix and Amazon is to reach a global audience.

Netflix's Christmas games were watched by subscribers in over 200 countries, showcasing Netflix's ability to reach an international audience. The league wants to grow the game internationally, and the streamers can help them do that. So, what's the takeaway? It looks like the streaming wars are no longer just about scripted shows and movies. It looks like live sports are now the new battlefield. YouTube TV, Netflix, Amazon, Peacock are proving that. sports can drive subscriber growth in ways that other content just can't.

And while the NFL is leading the way, streamers are also targeting other major sporting events. Like Netflix just announced they secured exclusive rights to the next two FIFA women's world cups. So it looks like the world of sports media and sports rights is evolving fast. And these streaming giants with big pockets seem to be in the driver's seat. Well, all right, guys, that's it for today's weekend. Deep dive.

Thank you guys so much for spending your weekend with us. If you guys enjoyed today's episode, consider giving us a five-star rating on Apple, on Spotify. Leave us a comment on Spotify. Let us know what other topics we should cover in future weekend deep dives. All that engagement really does help us out and it helps other people find the show.

Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes and we'll see you guys back here on Monday. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security

as a recommendation to buy, sell, or hold that security. Rundown guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals, learn more at public.com disclosures. In partnership with Zayidamani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.