Forget Chris Rock’s live hit or the epic reunion bust of ‘Love Is Blind’ – the true benchmark for Netflix’s exploration of live sports should be based on… Universal’s ‘Sing 2’.
That is the argument made Thursday morning by Moffett-Nathanson’s media analysts; Before you think we’re signing up for some quack research, let Michael Nathanson explain his position.
While you may be familiar with (and subscribe to) Netflix for original hits like “Stranger Things,” “Wednesday,” and “Bridgerton,” its vast library is mostly made up of acquired film and TV content. Those third-party leftovers account for more than half of the time viewed on Netflix in the US Compared to your average original series or movie, libraries are a stable, predictable, secure, and successful setup.
“The primary value of the acquisition is its reliability,” Nathanson wrote in a note to clients (and obtained by IndieWire). “The headlines are already made and proven… There is little or no risk of spending a fortune on a bomb.”
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Netflix bombshells include ‘Marco Polo’ and ‘Jupiter’s Legacy’ on TV, ‘The Gray Man’ and ‘The Ridiculous 6’ on film. (“The Gray Man” is the fifth most popular English-language film in Netflix’s recorded history, but earning 139,000 views in its first 91 days isn’t enough for a reported $200 million budget. Netflix’s #1 film of all The Times, “Red Notice,” got about 231,000 views on the same insane budget for a streaming movie.)
Nathanson pointed out that Pay-1 window offers for movies seem to work much better for Netflix, even expensive ones like “Sing 2,” which featured U2’s Bono as a grumpy lion.
“It was probably cheaper than most of the Netflix Originals that generated similar viewers,” Nathanson wrote. “If you were to include in the cost of Netflix’s blockbusters not only the cost of each individual title in isolation, but also all the underperforming titles the platform had to produce along the way, ‘Sing 2’ would probably look like a bargain.”
Netflix declined to comment on the price of “Sing 2” and Nathanson doesn’t have an estimate. But he told IndieWire that it stands to reason that, compared to Netflix original films, the return on investment for “Sing 2” must have been “optimal.”
After its debut on June 22, 2022 on the streaming service, “Sing 2” appeared. List of Netflix’s top 10 English-language films for eight consecutive weeks. (She added a ninth week at the end of April this year.)
The tradeoff in Netflix doubling down on third-party content is that it could dilute the Netflix brand. High-profile and expensive original films can be loss leaders, but they can also underpin the perceived value of the platform.
A $200 million Netflix movie seems to clip a coupon next to acquiring the sports rights, but the mind-blowing math can make sense too. As Netflix co-CEO and chief content officer Ted Sarandos once put it, the streaming service isn’t “unsporting”; it is “for profit”.
“While certainly expensive, sports, like acquired scripted shows, offer eyeballs with incredible consistency,” Nathanson wrote in the research note. “While each individual title may generate viewership more efficiently, the math can lean in favor of the sport when viewed as a group.”
Last month, The Wall Street Journal reported that Netflix was in talks to stream a celebrity golf tournament. We asked Nathanson which specific leagues Netflix should target. He would go after sports with “long seasons” (bonus if he has both a domestic and international season) and “a strong social media presence,” he said. Those would be “natural” for the king of streaming.
Of course none of this is particularly natural for Netflix, but what is it? There was a time when streaming wasn’t a natural fit for the mail-order DVD company. And then the originals weren’t; movies weren’t then. Then commercials; then live events. Now, sports aren’t yet, but they could be soon.
We asked Nathanson how much sports thinks Netflix should join its robust portfolio. It was a “great question,” he said (thanks Mike!), and answered like this: “Somewhere between ESPN and broadcast networks.”
