A few months ago, Netflix co-CEO Reed Hastings went on the record about the company’s current stance on live sports.
In particular, he cited Formula 1 as a possible path into that world.
“A few years ago, the rights to Formula 1 were sold. At that time we were not among the bidders, today we would think about it…We don’t own the Bundesliga, they can make deals with whoever they want. But that kind of control would be a prerequisite for us to be able to offer our customers a safe deal.”
At the time, we wrote this about how F1 makes sense as a path, should Netflix go that route:
Between the wildly successful (and very good) Drive to Survive docuseries and the recent (also very good) Schumacher documentary, F1 has sort of become a niche for Netflix. The success of Drive to Survive specifically, has been cited as a main factor in the massive viewership increase in the United States this season, for example.
So it’s maybe not a surprise that Formula 1 is a possible entry point for Netflix, should they decide to take this step. What would be a surprise: Netflix deciding to take that step in the first place; their stance has never really wavered.
Today, Hastings’ fellow co-CEO Ted Sarandos spoke on an earnings call and addressed the streamer’s current sports stance:
He said he wasn’t so sure that it could add a “big profit stream” with the addition of live sports. “I’m not saying that we’ll never do sports, but we’ll have to see a path to growing a big revenue stream and a great profit stream with it,” he said.
So not a huge change to the status quo, but it remains interesting that they’re not ruling it out completely. The F1 rights are up for bid in the United States at the moment, with the current ESPN deal set to expire after this season. It would be a big shift for Netflix, but they would also theoretically be able to just do what ESPN does currently and simulcast the Sky Sports coverage, requiring very little production on their end. It would be fairly turn-key.
As to the why, well, there’s also the grander context of the earnings call, with Netflix losing subscribers. The stock dropped sharply upon the news.
Netflix's bad year just got worse. https://t.co/MDWDyNAkkm
— Frank Pallotta (@frankpallotta) April 19, 2022
At this point, Netflix has pretty much saturated the American market for subscribers, and growth will probably have to come from elsewhere in the world. That is, unless they do something radical like add live sports to their portfolio, appealing to a completely new segment of the market!
It’s here where the F1 connection might fall a bit flat; if the uptick in F1 interest in the United States is indeed due to people with Netflix watching Drive to Survive and picking up the sport, obviously that crowd already has Netflix. But there could be something to be said for Netflix expanding into the live rights market, though. For one thing, all of their competition is doing it. For another, looking at how ESPN+ has managed to build up a subscriber base by adding a diverse array of exclusive sports, even if some are more niche.
None of this is likely to change any time soon. Netflix has bigger issues at the moment. But it remains interesting that they aren’t ruling it out.