Why Netflix spent billions for WWE

Summary

Summary of "Why Netflix Spent Billions for WWE" The Indicator from Planet Money | NPR | Released on January 7, 2025

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Introduction to Pro Wrestling and Its Mainstream Appeal

The episode begins with hosts Adrian Ma and Darian Woods exploring the world of professional wrestling. Darian describes pro wrestling to novices as “scripted acrobatics that mostly has an audience of teenage boys, a lot of teenage girls, and a lot of adult men and women too” (00:26). They introduce Kazim Famuyide, co-host of the "Masked Man Show" podcast, who likens pro wrestling to “a violent soap opera” (00:42). Kazim emphasizes that wrestling blends combat sports with entertainment, compelling storylines, and charismatic personalities, making it a staple in pop culture (00:52).

Kazim also touches on the shifting perception of pro wrestling, noting that it’s becoming more widely accepted and no longer viewed as a niche interest. He states, “It’s very much entrenched in pop culture everywhere and it doesn't seem like a weird thing to like anymore. It just sort of feels like one of the other major sports” (01:18).

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The Rise of Streaming and Netflix’s Strategic Investments

Darian introduces the central topic: World Wrestling Entertainment (WWE) making a significant move by debuting its flagship program, "Monday Night Raw," on Netflix. This marks a $5 billion deal securing exclusive streaming rights for the next decade (03:08). This partnership is a cornerstone in Netflix's broader strategy to capture live sports content, positioning itself against traditional cable and broadcast networks.

Adrian poses a critical question: “What does Netflix's investment in live sports programming say about the war for viewers’ eyeballs and does it signal the end of cable TV?” (01:51).

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Details of the WWE and Netflix Partnership

"Monday Night Raw" has been a long-running cable TV program featuring high-energy performances and live sports entertainment. The recent shift to Netflix signifies a major transition, with promotional efforts branding it as “Raw on Netflix” (03:08). This move is part of Netflix’s broader acquisition of live sports rights, including National Football League (NFL) games and the Women’s World Cup, aiming to diversify its content beyond traditional movies and TV series.

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Expert Insights: Paolo Pescatori on Streaming Strategy and Challenges

Adrian interviews Paolo Pescatori from PPForesight, who provides a deep dive into Netflix’s motivations and the challenges it faces. Paolo explains that “for Netflix, they need to diversify. They can't just solely rely on one genre, say, or just on-demand programming” (04:49). This diversification is essential to maintain Netflix's competitive edge in a saturated streaming market, where rivals like Amazon, Apple, Hulu, and niche players are constantly vying for subscribers.

Paolo further discusses the technical hurdles of streaming live sports, highlighting the necessity of “a robust and reliable infrastructure to deliver those streams at scale to millions of users worldwide” (05:26). He points out that while acquiring rights is a significant step, ensuring seamless streaming quality is equally crucial for viewer retention.

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Viewer Reception and Technical Hurdles

The episode recounts a recent instance where Netflix streamed a high-profile boxing match between Jake Paul and Mike Tyson. Despite attracting tens of millions of viewers, the event was marred by technical issues, such as buffering and low-quality streams. A frustrated viewer expressed their disappointment on TikTok, questioning Netflix’s capability to handle live sports:

"What's wrong with Netflix's stream? First off, this looks like it's running in 360p. What? The audio's low, the crowd sounds loud. What's going on, Netflix? Have you not had any run at this at all?" (06:01).

Despite these setbacks, Netflix's foray into live sports isn't all negative. The platform achieved notable success by streaming two NFL games on Christmas Day, each drawing approximately 14 million viewers and becoming the most-watched English language programs on Netflix that week (06:31).

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Cord Cutting and the Shift from Cable to Streaming

Darian discusses the broader trend of "cord cutting," where consumers are abandoning traditional cable subscriptions in favor of streaming services. Citing IBISWorld data, he notes that U.S. cable subscriptions have plummeted from over 100 million a decade ago to just 66 million today (03:08).

This trend underpins why sports leagues are keen to partner with streaming platforms. Paolo explains that leagues aim to “broaden their customer base beyond the core following” and to better connect with viewers who are moving away from cable (06:43). Streaming platforms like Netflix offer a way to reach international audiences and adapt to changing viewer behaviors.

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The Future of Sports Broadcasting: Predictions and Implications

Looking ahead, Paolo predicts that the competition between streaming services and traditional cable will intensify, potentially leading to new business models or mergers within the industry (07:13). He envisions a future where major global sporting events could be exclusively available online, although he suggests that iconic events like the Super Bowl might remain with traditional broadcasters for now (07:40). However, he anticipates that by the 2030s, significant global events could transition to internet-only platforms.

Adrian adds a perspective on the swiftness of this transition, suggesting it could happen sooner than expected, potentially with a diverse range of events, including niche competitions like the Westminster Dog Show (08:00).

Kazim Famuyide offers a counterpoint, emphasizing the passionate and loyal fanbase of pro wrestling: “I’d say pro wrestling fans are some of the most die-hard loyal fans I've seen in any form of entertainment. If you build it they will come” (08:17).

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Conclusion: The Ongoing Battle for Viewer Engagement

The episode concludes by highlighting the ongoing struggle for viewer engagement between streaming giants and traditional cable networks. Darian and Adrian discuss the potential shifts in content distribution, emphasizing that the survivors in this competitive landscape will be those who innovate and offer compelling online content.

Darian teases future possibilities, asking listeners what big sports competitions they’d like to see on Netflix. Adrian humorously suggests “Competitive Game Theory,” aligning with Netflix’s brand of unique and engaging content (08:28).

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Production Credits

The episode was produced by Corey Bridges, engineered by Jimmy Keighley, fact-checked by Ciara Juarez, and edited by Cake and Cannon for NPR's The Indicator.

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Notable Quotes:

• Kazim Famuyide: “It’s very much entrenched in pop culture everywhere and it doesn't seem like a weird thing to like anymore. It just sort of feels like one of the other major sports.” (01:18)

• Paolo Pescatori: “For Netflix, they need to diversify. They can't just solely rely on one genre, say, or just on-demand programming.” (04:49)

• Aggrieved TikToker: “What's wrong with Netflix's stream? First off, this looks like it's running in 360p. What? The audio's low, the crowd sounds loud. What's going on, Netflix?” (06:01)

• Kazim Famuyide: “I’d say pro wrestling fans are some of the most die-hard loyal fans I've seen in any form of entertainment. If you build it they will come.” (08:17)

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This episode of The Indicator from Planet Money provides a comprehensive look into Netflix’s strategic investment in live sports, particularly WWE, against the backdrop of the broader shift from traditional cable to streaming platforms. Through expert insights and engaging discussions, it sheds light on the complexities and future trajectory of sports broadcasting in the digital age.

Transcript

[NPR]

Npr.

[Adrian Ma]

This is the Indicator from Planet Money. I'm Adrian Ma.

[Darian Woods]

And I'm Darian Woods.

[Adrian Ma]

Darian, have you ever watched pro wrestling before?

[Darian Woods]

I had a friend who was into it, so yes.

[Adrian Ma]

Okay, so you've seen it before. How would you describe it to somebody who's never seen it?

[Darian Woods]

I would say it's kind of like scripted acrobatics that mostly has an audience.

[Adrian Ma]

Of teenage boys, but a lot of teenage girls. And let's be honest, a lot of adult men and women too, right?

[Darian Woods]

That's true.

[Adrian Ma]

Here's how Kazim Famuyide describes pro wrestling.

[Kazim Famuyide]

It's in essence, a TV show. It's a violent soap opera.

[Darian Woods]

Kazim is a co host of the Masked man show, which is a podcast about pro wrestling.

[Kazim Famuyide]

Like it's combat sports, it's all that, but it's also entertainment. It's also storylines, also the big personalities that bring you in for a long time.

[Adrian Ma]

Kazim says admitting you liked pro wrestling could be a little embarrassing and earn you some judgmental looks for people who just didn't get the appeal of muscle bound dudes in spandex pretending to body slam each other. But in recent years, Kazim says, it feels like that's changing.

[Kazim Famuyide]

It's very much entrenched in pop culture everywhere and it doesn't seem like a weird thing to like anymore. It just sort of feels like one of the other major sports.

[Darian Woods]

And this week, pro wrestling took another big step into the mainstream as World Wrestling Entertainment wwe, which for years ran on cable tv, debuted on the world's largest streaming platform, Netflix. It is the latest punch thrown in the ongoing fight for sports content between stream streamers and the old school cable and broadcast networks.

[Adrian Ma]

Today on the show, what Netflix's investment in live sports programming says about the war for viewers eyeballs and does it signal the end of cable tv?

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[Darian Woods]

Have heard in recent years about a trend called cord cutting. That's where customers increasingly abandon their cable TV subscriptions in favor of their content in other places, like streaming. According to the market research firm IBISWorld, a decade ago there were over 100 million cable subscribers in the US and today it's only 66 million.

[Adrian Ma]

That is a huge drop. And in a sense, cord cutting is what World Wrestling Entertainment WWE is doing with one of its longest running programs called Monday Night Raw. Now if you haven't seen this, Monday Night Raw is sort of like a traveling carnival of carnage. Every week a different city, and every Monday an evening medley of head bashing and chair smashing and high flying dropkicks ensues. And it all airs live on cable tv. But yesterday's Monday Night Raw was different from these others because for the first time it went live on Netflix. WWE and Netflix promoted the heck out of it. Welcome to Raw on Netflix.

[Darian Woods]

This is part of a $5 billion deal where Netflix agreed to pay WWE for exclusive rights to the show for the next decade. And it's not the only live sports deal Netflix has struck. It's also secured rights to stream National Football League games and the Women's World Cup. So why would Netflix pay billions of dollars for this content when it already has its own massive machine for generating movies and TV series? We put that question to Paolo Pescatori. He tracks media and telecom companies for an analyst firm called PPForesight.

[Paolo Pescatori]

I think for Netflix, they need to diversify. They can't just solely rely on one genre, say, or just on demand programming, paolo says.

[Adrian Ma]

Netflix is the global leader in streaming right now, and according to the company's third quarter earnings report, it has about 282 million subscribers around the globe. But there are plenty of competitors nipping at its heels like Amazon, Apple, Hulu, plus lots of smaller niche streaming companies. For Netflix, getting rights to stream live sports is about keeping its competitive edge. Thing is, Paolo says that this is easier said than done.

[Paolo Pescatori]

You know, it's not just about acquiring those rights. Perhaps more important is ensuring that you have a robust and reliable infrastructure to deliver those streams at scale to millions of users worldwide the difficulty of streaming.

[Darian Woods]

A live event around the world became clear when Netflix ran a boxing match between Jake Paul and Mike Tyson in November. Many of the tens of millions of people who tuned in were hit with lots and lots of buffering. This one, aggrieved Tiktoker, had a lot to say about the production.

[Aggrieved TikToker]

Let me ask you something. What's wrong with Netflix's stream? First off, this looks like it's running in 360p. What? The audio's low, the crowd sounds loud. What's going on, Netflix? Have you not had any run at this at all?

[Adrian Ma]

Still, Netflix's early forays into live sports seemed to be successful at attracting viewers. For example, last month Netflix for the first time streamed two NFL games live on Christmas Day. And each of those Games drew about 14 million viewers, making it the most watched English language programs on Netflix that week.

[Darian Woods]

Those kind of numbers also explain why, from a sports league's perspective, they're also interested in getting their games on streaming. Especially as a lot of TV watchers increasingly cut the cord.

[Paolo Pescatori]

With the users now flocking towards services like Netflix and the like, the sports associations, the leagues and the franchises now want to be better connected with where the viewers are. They want to kind of broaden their customer base beyond the core following. They obviously want to move into other countries and they want to have a better understanding and attitudes of the sports fan than they currently do today.

[Darian Woods]

The way things are shaping up, Paolo predicts this content war between streamers and old school cable and broadcast networks will continue. And in the future, some may look very different, changing business models or merging with other companies.

[Adrian Ma]

One thing for sure, he says, is that the ones who survive will be looking for ways to offer their content online. And in fact, we're already seeing some old school cable and broadcast providers distributing their content over the Internet.

[Paolo Pescatori]

Will we ever see the super bowl being streamed over a streamer over the next five years? Most likely not. But certainly in the2030s we will get to see a big global sporting event being exclusively available over the Internet.

[Darian Woods]

That's actually more pessimistic than I would have thought.

[Adrian Ma]

I mean, I think it'll probably come sooner than we think. And next will be like the Westminster Dog Show.

[Darian Woods]

Well, WWE isn't the Super Bowl. Well, to be frank, nothing is the super bowl for folks like Kazim Famiyide. It doesn't really matter.

[Kazim Famuyide]

I'd say pro wrestling fans are some of the most die hard loyal fans I've seen in any form of entertainment. If you build it they will come.

[Adrian Ma]

Darian, if you could see any big sports competition on Netflix, what would you want to see?

[Darian Woods]

Competitive Game Theory. Maybe.

[Adrian Ma]

That would be on brand. Yeah, Netflix. You know who to call.

[Darian Woods]

I'll be waiting.

[Adrian Ma]

This episode was produced by Corey Bridges with engineering by Jimmy Keighley. It was fact checked by Ciara Juarez. Cake and Cannon edits the show in the indicators for production of npr.

[NPR]

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