Original Article: The New York Times, by Richard Deitsch, December 20th, 2024

If you want an interesting take on Netflix and its grand ambitions, you won’t find many places better on the subject than the research firm MoffettNathanson, which provides trends in media, communications, and technology to institutional investors. Michael Nathanson, the co-founder and senior managing director of the research firm that carries his name, evaluated Netflix for many years and has a guiding principle when it comes to the company:

Watch what Netflix does and not what the company says.

What Netflix did earlier this year was land the exclusive rights to stream two NFL games on Christmas Day — a three-season deal that also includes a game on Christmas Day in 2025 and 2026.

It’s a significant moment.

‘This is about the next generation of power players.’ In a few days, all of us will witness a new chapter in the NFL and the streaming giant’s sports-media ambitions when Netflix streams the Kansas City Chiefs-Pittsburgh Steelers game at 1 p.m. ET, followed by the Baltimore Ravens-Houston Texans game at 4:30 p.m. ET. Both games will air on broadcast TV in the competing team cities and also will be available on U.S. mobile devices with NFL+.

The Hollywood Reporter tagged the rights fee of each game for Netflix at $75 million — pocket change for the company. That number doesn’t include the cost of Beyoncé and Mariah Carey performing on the broadcasts as Netflix attempts to bring a Super Bowl feel to the product.

“The NFL is always looking at futures, and this is about the next generation of power players in the media space, which unquestionably Netflix has become,” said Ed Desser, the president of Desser Sports Media Inc. and a senior media executive for the NBA for 23 years. “Now having said that, they have not become a power player in sports yet. One boxing match and a couple of NFL games on Christmas Day does not a juggernaut make. But this is the beginning for a company that swore up and down for years that it wasn’t interested in sports.”

The reason why this should matter to you as a sports fan is Netflix is a behemoth with about 270 million subscribers globally, including 80 million in the U.S. and Canada, and a market capitalization north of $395 billion as of last Monday. Netflix being any kind of player for upcoming live sports rights will change the landscape of sports consumption and cause consternation for the traditional linear powers given its financial might.

Meanwhile, as Netflix has moved from a pure subscriber company to one that’s now in the advertising business, it wants to scale ad consumption and revenue, and there are few better content plays to sell ads against than NFL games. (Netflix has sold out of all available in-game inventory for the two live games.)

The NFL also gives Netflix a massive marketing opportunity. It is not a coincidence the streamer is releasing the second season of “Squid Game” on Dec. 26.

We are going to get some decent data too. Unlike the Mike Tyson-Jake Paul boxing bout last month, where the viewership data came from Netflix’s first-party streaming data, Nielsen will be part of the measuring process for these games, similar to its accredited role measuring Thursday Night Football games on Amazon Prime Video.

“We’re looking at the viewership metrics and how they compare to other NFL games with the standardized Nielsen measurement compared to Netflix’s internal metrics for the Tyson-Paul fight,” said MoffettNathanson senior analyst Robert Fishman, who covers Netflix.

Avoiding ‘Jake Paul-Mike Tyson 2.’ So how will it look for you as a viewer? That’s probably the biggest question hovering over the games, given viewers were plagued by frequent bouts of buffering and freezing for the Paul-Tyson boxing event. There were technical issues throughout the broadcast, with Jerry Jones’ microphone malfunctioning during an interview. (As wryly noted at the time by Fox Sports president of insights and analytics Mike Mulvihill, there was great irony in Jones’ praising Netflix’s future with the NFL as viewers experienced tech issues.)

There’s already one significant difference between the Paul-Tyson fight and Netflix’s NFL Christmas production: Netflix has outsourced production of the games to CBS, while NFL Media has been charged with the pre-, halftime, and postgame shows. You might have seen the announcement of on-air talent, which includes a rare mixture of NFL staffers from CBS, ESPN, NBC, NFL Network, and Fox. For instance, NBC’s Noah Eagle will call the Ravens-Texans game alongside Fox’s Greg Olsen. The sideline reporters for that game will be NFL Network host Jamie Erdahl and NFL Network reporter Steve Wyche.

Multiple talent agents who were granted anonymity to speak freely told The Athletic that Netflix paid talent between high five figures and low six figures depending on the role (with game talent getting paid on the higher end). This is why every sports broadcaster wants a relationship with Netflix.

The broadcasters won’t be an issue; it’s simply whether Netflix will have a repeat of the technical glitches that punctuated its disastrous boxing night. At Netflix’s International Showcase last month, Netflix chief content officer Bela Bajaria projected confidence about issues not repeating for the NFL broadcast. She said the streamer and its engineering team would be ready.

‘They will learn from it.’ While a repeat of the boxing broadcast issues will enrage NFL fans — and rightly so — John Kosner, a former ESPN digital media executive and now investor in digital startups and president of Kosner Media, predicted that even buffering issues would not change the trajectory of a potential long-term partnership between the NFL and the streamer.

“It would certainly be a PR black eye, but I tend to think that the NFL views this as a technical problem that can be solved,” Kosner said. “The nature of broadcasting this simultaneously everywhere creates new opportunities. I’m sure all the parties very much want Netflix to solve it for Christmas Day. So other than the short-term PR embarrassment that happened coming after the Tyson-Paul fight, I don’t think it really changes things.

“Conventional wisdom was that you couldn’t put your games on the scale on the internet and have all these simultaneous users, but of course, Amazon has proven first that you can.”

Amazon Prime Video proved very quickly that money and hiring the right people can create a sustainable NFL broadcasting structure on a streaming platform. There is no reason Netflix could not do the same. If the broadcast goes well — and I expect it will — along with the NFL and Netflix taking victory laps, watch what Netflix does as opposed to what it says, as far as signaling more traditional sports ambitions.

“Netflix is still in the discovery phase,” Desser said. “This is an R&D measure for them, and they will learn from it. I think that the NFL would like nothing better than for Netflix to be a serious bidder next time around for a full slice as opposed to the crumbs.”