From Fortune:

Netflix had a busy Tuesday, signing a 10-year, $5 billion deal with WWE for live sports coverage while also releasing their fourth quarter and full year earnings. The move into live sports follows a massive subscriber growth and the announcement of 23 million subscribers for its ad-supported tier. Shares of TKO Holdings, which owns WWE, soared 15% in pre-market trading, with executives citing Netflix’s global reach as a major reason for the deal.

Netflix’s choice to air WWE over other sports is supported by the fact that WWE is a ratings powerhouse with 17.5 million unique viewers in 2023 and 90 million fans as of June. WWE fans are often loyal subscribers, with 11 million viewers in the U.S. for live programming. Moreover, Netflix’s move into live events comes at a time when media rights for other major sports are locked up for the foreseeable future.

Streaming companies have long eyed live sports, and Netflix’s move into live sports signals a growing trend among streamers to attract viewers. AppleTV+, Warner Bros. Discovery, and Amazon Prime Video all have signed deals to stream live sports, and Netflix plans to create original sports content in addition to airing live broadcasts.

Adding live programming like WWE is a strategic move for Netflix to grow its ad-supported tier and contribute to its overall subscriber growth. With a focus on shoulder programming and documentaries about sports, Netflix is positioned to attract new subscribers and increase ad revenue. By licensing WWE, Netflix gains access to an immediate and loyal audience, strengthening its position in the streaming market.

The deal between WWE and Netflix will dramatically impact Netflix’s ad-supported tier. Live sports broadcasts create natural opportunities for advertising, and as the number of subscribers and viewers increases, ad revenue also grows. Netflix’s decision to eliminate its cheapest plan and nudge consumers towards its ad-supported tier reflects the company’s confidence in the potential ad revenue from live sports. Additionally, WWE represents an immediate and substantial audience for Netflix, making it a mutually beneficial deal for both parties.



Read more: Why did Netflix pay $5 billion for WWE?