Netflix’s Anti-ESPN Thesis

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1:04congratulations you made the varsity the podcast my name is john oran and i am pucks sports correspondent and the host of this pod and today we are joined by gabe spitzer gabe is one of the top sports executives at netflix which is bringing more and more sports on its service in fact i'm in miami right now to take in a made for netflix boxing match between jake paul and anthony joshua So Gabe and I are going to talk a lot about how Netflix views sports and probably more importantly, the types of sports that Netflix is interested in. But before we get to Gabe, today is Sunday, December 21st, and here's what I'm watching.

1:44I broke the news of a small rights deal on my private email on Thursday. ESPN, which has carried every Heisman Trophy presentation since 1994, extended its deal with the Heisman Trust for another six years. And the reason why I'm talking about this today on this podcast isn't because it's some sort of groundbreaking deal. It's not. ESPN is going to carry the ceremony, announce a finalist, produce shoulder programming around the event, everything that's already done. But to me, this type of deal really illustrates how business is conducted in the sports biz. First, there's a whole relationship aspect of this.

2:21I'm serious. Relationships matter more in sports media than in any other business that I have covered. I've seen executives make questionable deals just to keep working with business partners that they like. ESPN has carried the Heisman announcement for 32 years. Now that's a relationship. Chris Fowler, he's hosted it each of those years. Neither side was eager to end this relationship. In fact, when I asked ESPN executive Kurt Dargis about this, he started talking about ESPNs, and I'm going to quote him here, vitally important partnership with the Heisman Trust. And this happens more in sports than elsewhere.

3:00I mean, the Masters, it's been with CBS for 70 years, 7-0, amazing. Fox, it's had the NFL since a broadcaster launched. ESPN carried the NFL draft since the early 1980s. Now, this Heisman deal also marks a sign of the times for me. ESPN has committed$2.6 billion per year to the NBA. It's paying$2.7 billion to the NFL, and that figure is going to jump in the next few years. College football, baseball, hockey, I've said this for a while. Wright's deals are being split between the big guys, like the NFL and the NBA, and the little guys like the Heisman Trust. It's the middle class of sports rights that are in trouble.

3:45And my beat over the next few years is to figure out where that line falls. So this Heisman deal, while small, fits right into ESPN's programming strategy. The fact that it attracted 4.3 million viewers, it makes it a lot easier for ESPN to renew this type of deal. Then there's a whole Heisman aspect of this. Jeff Price, he's a new CEO of the Heisman Trust. He told me that he expects ESPN is going to help the event grow its stature. Instead of viewing it as a one-hour show, Price wants the Heisman to be part of a season-long campaign that'll really help it take advantage of the popularity of college football.

4:25Because the Heisman Trophy really is still a good brand, but it doesn't have the same relevance that it had when I was a kid. There's no reason to believe that it can't start to recapture that glory. Okay, now let's get to Netflix executive, Gabe Spitzer. My first question for you is, from a 50 ,000 foot view, take me in a Netflix conference room when you're deciding what live sports that you're interested in and what live sports you aren't. How do those conversations go? Sure, first of all, thanks for having me as a Vermonter and lifelong Boston fan. And being on Nessun is a life dream for me.

5:05A life dream? Yeah, exactly. So I'm here and, you know, obviously. And Gabe, we're commandeering the full hour on Nessun. I love it. I love it. So I'll tell all my friends and family. But no, you know, look, I think it's been an incredible two-year journey that we've had since we've started on the live sports side. And, you know, what we look for, it's the same way we assess content like a Stranger Things or a Bridgerton or any of our big scripted TV or, you know, or films around the world. we want to do things that feel big loud can create that global conversation to our 300 million plus members around the world and that's how we're assessing sports as well you know our co-ceo ted sarandos he says it's an event strategy more than a sports strategy you know obviously we have you know incredible history in the sports documentary space but in the live sports space it's really you know what are those events that are going to create conversation that are going to be that water cooler conversation that are going to bring people from around the world to want to click on Netflix and watch it.

5:58So, you know, we're here in Miami right now. We have an, you know, an incredible fight tonight with Jake Paul and Anthony Joshua. And six days from now, we're around the world with, you know, two games, NFL games on Netflix. So, you know, that's really how we're looking at it. We're not going to be in that big volume strategy. We're going to be in that strategy of how do we make that one event that's going to get people talking and that's going to get people to, you know, to click play on Netflix. Don't say it. Don't say it. Eventize? Look, I came prepared knowing it's your favorite word. So I know the listeners won't be able to see this, but we made you an eventized t-shirt right here.

6:33Oh, look at that. Here you go. So keep it, wear it proudly. Oh, I love it. Yes. We know it's your favorite word. Hashtag eventized. But yes, look, we do want to eventize these things. We want people, we want that conversation of this could only happen on Netflix and it feels bigger and better. So you started the Live Sports Strategy two years ago. Yep. How has it evolved in two years? in a surprising and exciting way. Look, two years ago, we launched our first event. It was the Netflix cup. You probably didn't watch it. It was, you know, it was a, it was golf. So it's okay. It's okay. We won't blame you, but it was, you know, it was a Tuesday afternoon in Las Vegas, an exhibition golf event, you know, with drivers from drive to survive F1 drivers and golfers from our show full swing.

7:16And it was look a great way in. Cause we wanted to see, let's get our live up and running only about six months earlier. We'd had a Chris rock, which is our first live event ever. And my boss, Brandon Rieg, had been a big proponent of let's get live functionality on Netflix just to see, you know, how is that difference? How is it going to bring people? Historically, obviously, we're streaming video on demand. You can click and watch anything you want whenever you want, but we need to create that sense of immediacy. So that was two years ago. One year ago, obviously, the Jake Paul, Mike Tyson event, which was massive for us.

7:45And now here we are where we have a fight massively globally tonight. We have Christmas games on Christmas, you know, two NFL games, and then obviously upcoming big events with Major League Baseball, the Women's World Cup coming in 2027. So it's evolved in a way that's like more exciting than I could have ever imagined that when we started two years ago and hopefully a lot more to come. So what made you go away from like bringing, you know, the tennis and the golf and then doing these deals that you now have with FIFA, the NFL, MLB? I mean, the biggest leagues in the world right now. Yeah. Look, I think that was the difference is there's so much competition out there, not just on Netflix, but everywhere else for people's eyeballs.

8:25Right. So, you know, there's so many other streamers, there's broadcast networks, there's movies, there's TV, there's all of it. So I think we wanted things that could grab people and, you know, create that attention and want to bring them to Netflix. So there's a difference in, you know, the effort to create our own IP and to create our own events versus working with the biggest leagues in the world. You know, the first one, obviously, which knocked down that door, which Bella Bajari, our chief content officer, was the huge proponent of was WWE, right? It is that hybrid sports and entertainment.

8:53But, you know, shortly after that Netflix Cup event, we started talking to Mark Shapiro and Nick Khan and Paul Levesque about what WWE could look like on Netflix. And that deal happened. And I think that sort of knocked down the door internally, even for people who had maybe doubted, should we do live? Should we do live sports to something now that's, you know, bigger and better. So help me out here. How did that knock down the door internally? What did you learn from that? I think for us, it was all about, historically, we've owned our content. It's been that you could only get it on Netflix.

9:25And I think the challenges at points with sports rights are they can be short-term. You could help build a league together and then suddenly they're going somewhere else a few years later. So it's something that was harder, I think, as we had discussions to say, does this feel like Netflix? But I do think when we got to WWE and you have that core audience that's coming week in, week out on Raw. But also I think the exciting part for us being a global streamer is we could help WWE and work together as a great partnership to grow it around the world, right? So we have almost the entire WWE library, SmackDown, Raw, the things like WrestleMania, their big PLEs are in places like France starting on January 1st.

10:04They're in Malaysia. They're in Japan. They're everywhere. So I think that was the part that felt like this is something we could grow together. It's a long-term deal, 10 plus years. And I think that then led to us saying, okay, what are other things that we could look at? What are those other big tentpole events that we could bring to Netflix? This isn't unique to Netflix. It's like when Amazon started doing Thursday Night Football, is looking for the lag, looking for the delays. You had some problems with a Tyson fight with people getting buffered out and having trouble connecting. After the Tyson fight, to my knowledge, there hasn't really been any of those problems anymore.

10:42How did that get solved? Was that a technical issue? Well, I think it was a combination of two things. First, we think we have the best product and engineering team in the world. I think it's just the viewing that night surprised even us. The amount of people tuning in around the world, so 108 million people live, that was 65 million concurrent accounts. The next day, we added more, so it was 125 million people. I think when you have that, it was the most streamed sporting event of all time. So I think when you have that many people tuning in at the same time, It created issues that we didn't even know about.

11:11Since then, obviously, our engineering team is best in the business. They've solved anything along those lines. And knock on wood, somewhere here that it hasn't happened again. And we've actually been praised even a month later for our NFL games of the streaming quality. What are some of the under-the-radar things that you've had to learn and had to sort of develop that didn't work as well in the beginning that you've fixed and solved now? I would just say we are not a legacy sports network, right? We are a very small, scrappy team on our Netflix side that are trying to build this up together.

11:43And it's a really exciting time. But we didn't have that built-in years of live sports knowledge or that staff that's done it week in and week out. So I think what we've tried to do is bring on great partners to work with us. So for the NFL next week, we have CBS producing our games. We have NFL Media doing the pregame and postgame. We have Ever Wonder, who's a great company, a production company on the outside, helping us to produce these events. So I think it's how do you take what we do best on the entertainment side and to thrill our members and combine with partners that are going to help us succeed there.

12:17So before I get into specifics with the various leagues, why is Netflix interested in live sports? What is it about live that, especially in the States, it's a very mature market right now. It's a mature market, but when you can do it in an eventized way and you can surprise people and you can get it. You said it. That time you said it. I said it for you. Yeah, thank you. I said it for you. But when you can bring Beyonce on at halftime for Christmas, like, I do think there's this sense of only on Netflix in some ways. And in the same way, right, we're going to get after our Christmas games, the final seasons of Stranger Things is launching.

12:55Like, for the biggest and best live events, you know, and whether that's a concert or a sporting event, there's nothing better to bring people together and to get people talking. You know, and I think we saw that with Mike Tyson and Jake Paul, that truly the world came together to watch that on Netflix and only on Netflix. So I think we see the power of what the best and biggest live sports events can do. All right. Christmas Day games. Those are big events, especially with the halftime shows that are coming up. Yep. What what's your appetite in terms of expanding the relationship with the NFL.

13:28They're obviously going to have the rights come up. They're looking for an international package of games. Is that not like is a weekly NFL game? Is that a big enough event for Netflix? I mean, the NFL, as it's proven in the U.S., is a big event anytime they're on. So, you know, we they're great partners dealing with Hans Schroeder and Ani Bost and the team over there, like and obviously the commissioner, you know, as as opportunities come up, we'll continue to talk to them about it right now. we're super happy with what we have on Christmas. You know, it was those two games are the two most streamed sporting events in NFL games in U.S.

14:01history. So obviously we're competitive. We want to break our own record this year. We'll see what happens. But I think it's been an incredible partnership and we're hoping to continue it and we'll see what happens down the road. Where are you going to be on Christmas Day? I'll be in D.C. for the Commanders Cowboys. Oh, there you are. Yeah. Right in your neck of the woods. What's your day like on Christmas? Take me into that game. So look, I think obviously that's one game of our whole day. So we're going to be doing a lot of prep. I'll be in LA the day before with our team. And it's obviously a massive team that it takes to work on Christmas.

14:33Like I said, CBS is a part of it. NFL media is a part of it. It's not just Netflix as that part of it. So we'll have a two-hour pregame starting at 11 a.m. We'll have an incredible cast of talent that are in D.C. for the pregame. And we'll also have a group in Minnesota for the pregame for our other games. So we've got two hours there, obviously kickoff in D.C. at 1 p.m., and then we're shifting that entire audience at 4.30 over to Minnesota. And then in Minnesota, we have an unbelievable halftime with Snoop. We just announced the singers from K-pop Demon Hunters, which I know is your favorite movie, but it is truly the biggest film in the world this year and the biggest film we've ever had on Netflix.

15:11So that's going to bring a great international audience. Lainey Wilson, incredible country singer, and then some other surprises as well.

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16:22Let me go through a couple of the deals that you made. And the one that I like the best, frankly, is the FIFA Women's World Cup. Yeah, can't wait. Because very rarely am I totally surprised by a rights deal. Yeah. And when you came out with the announcement, that was legitimately surprising. You kept it. We tried to keep things tight. We didn't want you to break It's very tight, yeah. And I was working overtime to try to break it too. I think I felt maybe it was going to DAZN at the time. So well done. What was it about the Women's World Cup? Because you can eventize the final. You can eventize, say, the US women playing.

17:02But you're going to end up with a couple of countries that Wayne Gretzky probably can't pronounce. Right. Well, look, I think an event doesn't have to be three hours on one single day. The World Cup, there's nothing bigger, right? It's an entire month where you can say you can own that conversation. And obviously, when we started talking to FIFA, we had built a relationship. We'd done some documentaries with them, one called Captains, one called Under Pressure on the U.S. Women's National Team. So we had had conversations with them on that side. And when they approached us about the possibility of bidding in the U.S., it was sort of a no-brainer.

17:36and obviously talking to Bella and Brandon and others on our team, it felt like one where when we had looked at the ratings back in 2015 when it was in a great time zone, it was in Canada, it was 25 to 30 million people watching the final just in the U.S. The last two, one was in France, one was in Australia, not as great time zones for the U.S. or Canadian audience, but knowing in 2027 it would be in Brazil, amazing time zone, can have the biggest games in prime time, and in 2031 all signs are pointing to it being in the U.S., which obviously is incredible for us, and they're expanding to 48 teams.

18:08So it felt like one that just we could, with the right time and the right team in place, could really make bigger and better. And I think the thrilling thing for us and with the tech that we have is we have the rights in the U.S. in English and in Spanish. So it's the equivalent of what Fox and Telemundo are doing all in one. And then in Canada, we have the rights in English and in French. So it's the equivalent of what TSN and RDS are doing. So it's by far the most ambitious thing we've ever done on the sports side. We've got a great staff that have come in, Kate Jackson and Matt Leach, who came with decades of experience from ESPN, working in soccer, Eli Velasquez, who ran sports at Telemundo.

18:44So we're trying to build that team around it that's going to have that expertise to execute it. What's keeping you awake about that right now? Is it just the massive scale of it all? Yeah, a lot's keeping me awake on that one. Obviously, we've already been down to Rio a couple times. On Nessun, they can see the dark circles on your eyes. Yeah, exactly. We've been down to Rio to look at what our sets are like. But like I said, we're multiple networks in one at the same time. So you're going to be able to click on, and it's going to be an entirely different broadcast in Spanish than it is going to be in English.

19:12We're going to have 90 to 100 talent on site in Brazil broadcasting every game. So it's just the scope and scale. I know other networks have done it, but it's much bigger than anything we've ever done. So we're thrilled about it, though, and we can't wait for it to happen. Let me flip this forward. You know, the men's World Cup rights, which of course Fox has this coming season. Can I suggest that you're going to be interested in those moving forward? Or is that are you going to wait and see how the women's do? I think like any big sports rights that are out there now, you know, as we've matured, we're going to have the conversations with leagues.

19:44We're excited to understand what it's about. But we put your name there, whether you're. Yeah, exactly. I think whether you put it there, other leagues want to say Netflix has had the conversations even when we haven't. sometimes that happens but um we're we're honored to be be in the conversation um but no look i think like any of those we'll look at it but it's hard to say right now what what that conversation is going to be uh mlb deal i thought the mlb deal was unique because it in terms of eventizing you have you keep saying i know that's me there uh but you have the opening night game yep uh you have the field of dream game yep you have the um home run derby as well um so i i can see i can see what you're thinking in terms of that it's a three-year run uh rights come up in 2028 what are you gonna what are you what are the metrics what are you going to be looking at over the next three years to determine how aggressive you're going to be when a bigger tranche of rights come up yeah and i think you mentioned those three events and even before that which obviously we don't pay as much attention to you know on the u.s sports media side but we have the world we have the rights to the world baseball classic in japan which is coming in early march and outside of the women's world Cup is definitely ambitious for us because when we looked at those ratings in 2023, about half of the entire country was watching.

20:58It was bigger in Japan than the Tokyo Olympics were. So that was one where, so we started to build a relationship with Major League Baseball, again, through some documentaries that we did on the Red Sox and other teams. But getting the rights there is incredible. Obviously, Shohei and everything else and baseball is having a moment. So we'll start with that in early March. And then, yeah, more in many countries around the world, then we'll have opening night, which we think is really exciting. When we started to talk to Major League Baseball, they actually pulled up a game outside of their traditional opening day on Thursday to Wednesday.

21:28So we'll have an exclusive primetime window on Wednesday night, Yankees, Giants, which we're really thrilled about that matchup, and then Home Run Derby and Field of Dreams, as you mentioned. But for us, that's just three days on the calendar. But we think we can, in collaboration with MLB, make those feel bigger and bring a different audience in. And so with anything, we're looking at what the audience is, what the conversation is. But I think we're really excited about that partnership with MLB. I mean, right now in 2025, I can't imagine that Netflix is interested in a season-long package of MLB games or a season-long package of NBA games.

22:03Or not to pick on MLB, but one game out of 82 is not a big event. It's hard to create that as a big event. Do you see that changing at any point? I think for now, look, that is our strategy. and you're correct we're not in the volume business at least at this point in time anything can change i couldn't predict two years ago that we would have nfl games on christmas or you know a massive global fight today but at the moment no this is we we're competing with ourselves even at netflix you know my boss brandon reig likes to say it's a gladiatorial arena on netflix every friday night right you could watch stranger things or squid game or you could watch a baseball game right is there a battle to put it on the home screen it's not even a we have an algorithm Do we even call it a home screen?

22:45You can call it a home screen. You can call it whatever you want. But it is a battle for attention on and off Netflix. So I think for us, at least for right now, a more random game on a Friday night is not necessarily the same for us as opening night or home run derby, right? As a fan, you know what those mean and you might come to watch on Netflix. Could that change in the future? Sure, but I think this is what's exciting. This is where we want to focus at the moment. the um and i also wanted to talk a little bit about the world baseball classic i mean i the numbers in japan for the last one were through the roof the numbers in japan for the world series are through the roof as well so i i understand that it seems to be somewhat uh separate from your strategy a different sort of strategy to go in and get the rights solely for japan is that is that a good way i don't think i think it's maybe an evolution of our strategy look i think fellow Bajari and the chief content side, you know, we're programming for the world, right?

23:43And a lot of times that is, you know, we can get a global package. If the rights aren't available in some place, it might be, does it make sense for our members in Japan to have that? Just because it's not available anywhere else doesn't mean we should penalize them. And I think we should look at it as a great opportunity. That would be great for members in Japan to come in, or maybe people who are casual fans who have never signed up for Netflix, but love the World Baseball Classic, will want to come watch it. So it's not, I think it's just a, yeah, it's an evolution, but it's not against our strategy in any way.

24:09Like you had mentioned with the Women's World Cup, what was available at the time were the rights in US and Canada, and that's what we talked to them about. I'm not keeping count, but I think I've used the word eventizing four times. I think you've named Bella four times too, so we got that going. She's an important person in the business. She's a huge sports fan, so we like her. You know what really surprised me is ESPN opted out of its MLB deal, uh and i think kimmy pataro was he talked about this he wanted that mlb.tv out of market package which seems to work really well for a streaming company like a amazon i thought would have been interested in it they weren't uh sure uh are you interested that's more volume but it's almost more targeted volume i would think is that something that would fit in a not at the moment and i i'm a mlb tv subscriber and a red sox fan so you know i love what they do on that side but But I think it's a little bit different.