65 Million NFL Views Propel Netflix Toward Long-Term Growth

Key Points

• Netflix recently completed its introduction into professional football, breaking streaming records.
• The streaming service's push into live sports is a long-term tailwind that can help Netflix grow ad revenue and subscribers. 
• Other tech giants are poised to benefit from the trend as well.

The streaming giant Netflix NASDAQ: NFLX recently achieved massive success in its journey to enter the live sports market. The communication services company hosted two National Football League (NFL) games on Christmas Day, breaking records. The average audience for the games was over 26 million U.S. viewers. According to Nielsen, these were the most-streamed games in NFL history.

Netflix’s first foray into professional football has the potential to kick off a big long-term tailwind that can help the stock ride higher. I’ll provide more detail on why this is true for Netflix. I will also detail some other stocks that can benefit from the growing link between live sports and digital streaming.

Highlighting the Importance of Live Sports and Football

Several factors highlight why the record-breaking success of Netflix’s partnership with the NFL can be a big long-term tailwind. First, it is hard to overstate how much live sports dominate traditional video entertainment. In 2023, 96 out of the 100 most-watched shows on US television were live sporting events. Additionally, 93 of those came from college or professional football. That is an absolutely massive market share.

With so many people watching these games, the resulting advertising revenue also leads the market, and it’s not close. According to eMarketer, NBC charged over $1 million for a 30-second ad on Sunday Night Football, the most expensive level in 2024. NFL games also took the second and third spots for the highest advertising costs. The highest advertising cost on a non-football show was $132,000, just 13% of Sunday Night Football’s price ticket.

Clearly, this can be a strong driver of advertising revenue for Netflix, especially if it gets more NFL games. However, the right to stream these games is very expensive; Netflix paid the NFL $150 million to do so. It's not clear yet whether the company will earn back what it paid for the rights in advertising revenue, but the historic viewership numbers provide a positive sign. One concern is that the U.S. viewership for the Christmas games was down from around 29 million in 2023 on CBS and FOX. However, when adding international viewers, Netflix had over 30 million average viewers.

Why the NFL Christmas Day Success Can Lead to More Subscribers

The success also sets Netflix up to increase its share of NFL streaming over time. This can lead Netflix to its ultimate goal: increasing subscriber count. The Netflix-hosted Jake Paul vs. Mike Tyson boxing match increased new subscribers by over 1.4 million in the three days after the fight. Both the NFL games and the boxing match peaked at 65 million U.S. viewers. Netflix could certainly see a similar immediate rise in subscribers.

The success of the games also provides more credibility to Netflix as a live streamer. Netflix clearly fixed the buffering issues that plagued the Paul-Tyson fight, easing fears related to this. The company has much room to grow its relationship with the NFL. The two games it hosted account for less than 1% of the 285 NFL regular season and playoff games each year. Adding more games and other live sports can further bolster the company’s ability to acquire and keep subscribers. Overall, the trend of live sports content moving more toward streaming is a strong long-term tailwind for Netflix.

Other Stocks That Can Benefit From This Trend

Two stocks that immediately come to mind that can benefit are Amazon NASDAQ: AMZN and Google's parent company, Alphabet NASDAQ: GOOGL. The Amazon streaming service Prime has been hosting NFL Thursday Night Football games since 2023, which it has the rights to through 2033. Google’s YouTube TV also became the exclusive provider of the NFL Sunday Ticket in 2023.

All these firms are likely to battle over the rights to live sports. It marks the next frontier to expand their footprints both in the United States and around the world. Sports are a ubiquitous form of entertainment and a massive global market. Expanding into international sports rights is another way for these firms to inject growth over time. More broadly, the success shows that digital streamers can take live sports rights from traditional TV. This will lead to more viewers on their platforms. 

Another company that can benefit is The Trade Desk NASDAQ: TTD. It connects advertisers with ideal advertising platforms. Its focus on connected television (CTV) could push more demand for its services as sports move to digital platforms.