Netflix today
(As of 5:45 p.m. ET)
- 52 week range
- $465.77
▼
$941.75
- P/E ratio
- 50.18
- Target price
- $807.70
Streaming giant Netflix NASDAQ: NFLX has recently achieved tremendous success in its entry into the live sports market. The communications services company hosted two National Football League (NFL) games on Christmas Day, breaking records. The average audience for the games was more than 26 million viewers in the United States. According to Nielsen, these were the most watched games in NFL history.
Netflix’s first foray into professional football could create a big long-term tailwind that could push the stock higher. I’ll go into more detail about why this is true for Netflix. I’ll also detail some other stocks that could benefit from the growing connection between live sports and digital streaming.
Highlighting the importance of live sports and football broadcasts
Several factors highlight why the record success of Netflix’s partnership with the NFL could be a big tailwind in the long run. First, it’s hard to overstate how much live sports dominates traditional video entertainment. In 2023, 96 of the 100 most-watched shows on American television were live sporting events. Additionally, 93 of them came from college or professional football. This is an absolutely huge market share.
Because these games are watched by so many people, advertising revenue also leads the market, and that’s far from it. NBC charged more than $1 million for a 30-second ad on Sunday Night Football, its most expensive tier in 2024, according to eMarketer. NFL games also ranked second and third in terms of highest ad spend. The highest advertising cost for a non-football show was $132,000, just 13% of the cost of a ticket for Sunday Night Football.
Clearly, this could be a strong ad revenue driver for Netflix, especially if it gets more NFL games. However, the rights to stream these games are very expensive; Netflix paid the NFL $150 million for it. It’s unclear whether the company will recoup what it paid for the rights in advertising revenue, but the historical viewership numbers are a positive sign. One problem is that U.S. Christmas game viewership has dropped from about 29 million in 2023 on CBS and FOX. However, if you add international viewers, Netflix averaged over 30 million viewers.
Why NFL Christmas Success Could Lead to More Subscribers
Netflix stock forecast for today
$807.70
-8.91% DisadvantageModerate purchase
Based on ratings from 35 analysts
| High forecast | US$1100.00 |
|---|---|
| Average forecast | $807.70 |
| Low forecast | $545.00 |
Netflix Stock Forecast Details
This success also gives Netflix the opportunity to increase its share of NFL streaming over time. This could lead Netflix to its ultimate goal: more subscribers. Netflix’s Jake Paul vs. Mike Tyson boxing match added more than 1.4 million new subscribers in the three days following the fight. Both the NFL games and the boxing match drew 65 million viewers in the United States. Netflix could certainly see similar immediate subscriber growth.
The success of gaming also boosts Netflix’s credibility as a live-action streamer. Netflix has clearly addressed the buffering issues that plagued the Paul-Tyson fight, easing concerns about it. The company has many opportunities to develop its relationship with the NFL. The two games he called account for less than 1% of the NFL’s 285 regular-season and playoff games each year. Adding more games and other live sports could further improve the company’s ability to acquire and retain subscribers. Overall, the trend of sports content shifting toward streaming is a strong long-term tailwind for Netflix.
Other stocks that could benefit from this trend
There are two stocks that immediately come to mind that could benefit: Amazon. NASDAQ:AMZN and Google parent company Alphabet. NASDAQ: GOOGLE. The Amazon Prime streaming service has been airing NFL Thursday night football games since 2023, for which it has rights until 2033. Google’s YouTube TV has also become the exclusive provider of NFL Sunday Ticket in 2023.
All of these firms are likely to compete for sports broadcast rights. This marks the next milestone in expanding its presence both in the United States and around the world. Sports are a ubiquitous form of entertainment and a huge global market. Expanding international sports rights is another way for these firms to ensure growth over time. More broadly, the success shows that digital streamers can win live sports rights from traditional television. This will lead to more viewers on their platforms.
Another company that could benefit is The Trade Desk. NASDAQ: TTD. It connects advertisers with ideal advertising platforms. The company’s focus on connected television (CTV) could boost demand for its services as sports transitions to digital platforms.
You might want to hear this before you consider Netflix.
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