Why Netflix is doing live TV
Nov 27, 2024

Why Netflix is doing live TV

HTML EMBED:
COPY
Despite buffering and lag issues, Netflix’s live broadcast of the Mike Tyson-Jake Paul boxing match drew multitudes of viewers. Bloomberg’s Lucas Shaw explains how Netflix’s pivot will pay off for it down the road.

A 58-year-old Mike Tyson may have come up short in his ballyhooed comeback match against YouTuber-turned-boxer Jake Paul.

But Netflix emerged as a big winner, boasting 108 million viewers for the Nov. 15 spectacle, the most streamed sporting event in history.

Unfortunately for viewers, Netflix’s livestream of the fight suffered buffering and lag problems. It wasn’t a great start for the platform, which will be livestreaming some much-anticipated NFL games on Christmas Day. But the streaming service has been leaning into more and more live content.

Marketplace’s Meghan McCarty Carino spoke with Lucas Shaw, who writes the Screentime newsletter at Bloomberg, about the event and what it portends for Netflix’s future live endeavors. The following is an edited transcript of their conversation.

Nicholas Shaw: We haven’t had a full detailing or accounting of what happened, but it seems pretty clear that there were so many people trying to watch that the system sort of froze, if you will. Now, that’s not what you want, but I don’t think it’s a long-term problem. You know, you eventually get better at hosting it. And live is new for Netflix, right? Sure, this is a company that’s been doing streaming for 17 years, but they’ve been doing live for two, and not even really two. So I think they’ll figure it out. And if I were them, I would rather have it fail on a boxing match where the stakes don’t really matter, right? It’s an exhibition between a social media influencer and a 58-year-old, than Christmas Day, when they have two NFL games, right? But I think in the short term, you know, it’s not a great look. But longer term, the bigger takeaway is going to be, wow, a lot of people watched that thing.

Meghan McCarty Carino: This boxing match was definitely the highest-profile live event that Netflix has done. But can you review for us some of the other live events and livestreaming shows that Netflix has been doing already?

Shaw: There are two types of live events that Netflix has commissioned so far. Some of them are these very big, event-driven one-offs, right? They did a tennis match with Rafael Nadal and Carlos Alcaraz. They did a live roast of Tom Brady during their Comedy Week, that was their most watched live show before Tyson-Paul, and then they have some of these more recurring shows. There’s a cooking show with Dave Chang, there’s another show with this medium, Tyler Henry, that have smaller audiences but are on more regularly and give Netflix sort of an opportunity to experiment.

McCarty Carino: What is Netflix’s strategy with this? Why are they moving into so much live programming now?

Shaw: A big part of it, I think, is their pursuit of advertising. You know, they had this moment a couple of years ago where they stopped growing, and that was very scary for the company, and their stock crashed, and they had to figure out what to do. And the two big initiatives that they took on were they cracked down on password sharing, which has been very, very successful, and they introduced advertising. They created a cheaper, advertising-supported tier, but because they had so many customers in a lot of markets, it meant that the uptake on the ad tier has been relatively slow. So their base for advertising is pretty small. They can’t turn it into a huge business, but one of the things that they can do with live is they will have ads in that live programming, whether you pay for the ad-free tier or not, and so they can suddenly create a lot of new advertising inventory. Because if there are, you know, 80 million Netflix customers who watch the NFL game on Christmas Day, that’s a lot of advertising that they can sell.

McCarty Carino: As you noted, Netflix is hosting two NFL games on Christmas Day this year. Live sporting events are obviously a natural when it comes to things that people want to watch in the moment. I mean, is streaming just gonna turn into sports broadcasting?

Shaw: I don’t think streaming will turn into sports broadcasting, but sports will play a much larger role in streaming. We’re already seeing it, right? So if you look across the space, Peacock has a bunch of sports. Sports are a big part of its appeal. They’ve got “Sunday Night Football.” They had the Olympics this summer. They’ll start having NBA games next year. Paramount+ has football and some other sports. There’s golf and tennis that you can stream. Amazon has been the biggest of the pure streamers going after sports. They have “Thursday Night Football.” They just got an NBA package that’ll start next year. Netflix has thus far been probably the biggest outlier. These football games on Christmas are the first, like, real sporting event that they’ve taken, right? But if you are a sports fan, we will soon be at a point where you should be able to watch just about anything that you want on a streaming service, somewhere.

McCarty Carino: With this shift to more live programming and kind of reliance on the advertising model, does it seem like streaming is just kind of reinventing the cable TV model?

Shaw: It can feel that way sometimes, certainly. I mean, look, all these things that Netflix once said it wasn’t going to do, it was sort of created, or it grew into this opposition or alternative to cable, right? No advertising, supereasy to cancel, all these things. And it’s now circling back around. I think a lot of times we forget that businesses are cyclical, right? And so Netflix had a couple of really great ideas and a great product, and it positioned itself as an alternative. But then the bigger and bigger it gets, like, oh, maybe there was some logic in the way that that company ran before because that’s the best way to make money. So yes, you talk to folks, and they can be pretty overwhelmed by the number of different streaming services that you have to sign up for now, right? Which the whole problem with cable was the package was too big and it’s too expensive, and now it’s, like, there’s seven different services, and if you add them all together, they cost $100. The truth is, though, I think most people probably only pay for, you know, two, three, maybe four services, and some of them you’re not paying for on their own, right? Like, I don’t think a lot of people are paying for Amazon Prime for video, they get video because they want Amazon Prime. The other ones are the ones that really struggle with cancellations and churn, right? Like, the biggest problem for Paramount+, for Peacock, for Max, is that people will sign up for, like, a month, they’ll watch a show they want and cancel. Netflix and, to some extent, Disney are the two that people don’t really cancel.

McCarty Carino: Do you expect this foray into more live content to have much of an effect for consumers?

Shaw: The higher prices and more advertising are probably the, you know, the two biggest changes that customers will feel. I also hope, as a consumer, that the more money and live going into these streaming services means that the product on a lot of these services will get better. Netflix is the best and most effective of these from just like a consumer experience, but the consumer experience on a lot of these other services is pretty crappy. But if you’re suddenly going to have, you know, high-value sports on there, maybe you should improve your product too.

The future of this podcast starts with you.

Every day, the “Marketplace Tech” team demystifies the digital economy with stories that explore more than just Big Tech. We’re committed to covering topics that matter to you and the world around us, diving deep into how technology intersects with climate change, inequity, and disinformation.

As part of a nonprofit newsroom, we’re counting on listeners like you to keep this public service paywall-free and available to all.

Support “Marketplace Tech” in any amount today and become a partner in our mission.

The team

Daisy Palacios Senior Producer
Daniel Shin Producer
Jesús Alvarado Associate Producer
Rosie Hughes Assistant Producer