Netflix has inked a multibillion-dollar, 10-year deal for exclusive rights to WWE's flagship weekly wrestling show “Raw” as the streaming giant expands its offerings with more live content.
The deal will bring “Raw” to Netflix starting January next year, Netflix and TKO Group, WWE's parent company, said in a statement Tuesday. Netflix will also have the rights to stream the other WWE shows and specials outside the US.
The agreement will cost Netflix more than $5 billion and will last for 10 years, with the option to extend for another 10 years or exit after five years, TKO Group said in a regulatory filing.
Hours later, Netflix announced in an earnings release that it had achieved the largest fourth-quarter gain in company history with 13.1 million subscriptions. The service now has 260 million subscribers worldwide.
“By combining our reach, recommendations and fan base with WWE, we can bring greater enjoyment and value to their audience and our members,” Netflix Chief Content Officer Bela Bajaria said in a statement.
With the WWE deal, Netflix significantly expands its offering of live programming, which also includes the reality show “Love Is Blind.” Airing live programming can be particularly challenging for Netflix, as the company experienced technical difficulties during a “Love Is Blind” reunion episode last April. However, a live comedy special by Chris Rock went off without a hitch a month earlier. Netflix will broadcast the Screen Actors Guild Awards live for the first time next month.
The company has recently focused on sports documentaries rather than live sports. However, adding “Raw” to its lineup will make Netflix more competitive against rivals like Peacock, which has made live sporting events a backbone of its service and recently streamed a National Football League playoff game. Amazon Prime has been streaming Thursday night NFL games since 2022; Apple has signed a $250 million per year deal with Major League Soccer and an additional deal with Major League Baseball.
Just a few months ago, Ted Sarandos, the company's co-chief executive, told analysts during a third-quarter earnings conference call that documentaries and behind-the-scenes shows like “Drive to Survive,” “Full Swing” and “Quarterback” ” the … “are part of the sports business to which we attach the greatest value, namely the drama of sport.”
Regarding live sport, he added: “We are not opponents of sports. We are simply profit-oriented. We still need to figure out how to do this.”
The deal with WWE, which is sports-oriented and features live content that is largely scripted, could be a step toward a solution.
“The partnership between WWE and Netflix is a big deal,” said Forrester analyst Mike Proulx, noting that the company's pivot to live sports is comparable to its strategy shift in advertising. For years, company executives vowed that the service would never contain advertising. However, last year, Netflix began offering an ad-supported subscription at a cheaper monthly price.
Netflix now says its advertising plans account for 40 percent of all new subscriptions in markets where the plans are available. Sales rose 12 percent year-on-year to $8.8 billion in the latest quarter, while net income was $938 million.
“Make no mistake, Netflix's pivot toward live sports is all about advertising, as the company doubles down on big brands and instead spends its TV budget on Netflix's growing audience,” Proulx said.
As the streaming business matures in the US, more deals like this are likely, said KPMG analyst Scott Purdy.
“Media rights are extremely attractive to streaming companies because you have a guaranteed audience that wants to watch the big game, match or event,” he said. “This will undoubtedly impact how much content budget is allocated to live sports compared to other content options.”
“Raw,” which launched the careers of stars like Stone Cold Steve Austin, John Cena and Dwayne (The Rock) Johnson, has been on linear television since its debut in 1993. Today it airs on the USA Network, where it attracts 17.5 million unique viewers per year, according to WWE
TKO, which is controlled by Hollywood broker Ari Emanuel's Endeavor and was formed last year through the merger of WWE and Ultimate Fighting Championship, said in a separate statement that Mr. Johnson would join its board. TKO shares rose about 16 percent on Tuesday; Netflix shares rose slightly.
The WWE announcement came a day after Netflix announced that Scott Stuber, the company's film chairman who lured filmmakers like Rian Johnson, Zack Snyder and Greta Gerwig to the streaming service, would be departing in March. Its film team secured 18 Oscar nominations on Tuesday, making it the second-largest film studio after Disney.