The streaming service says live programming helps draw in new subscribers, but investors have become disillusioned with Netflix's broader engagement trends
Netflix now has the rights to air live games and events for popular sports including the football, baseball, boxing and wrestling.
Netflix got its start renting out DVDs by mail. It then became an entertainment powerhouse by paying up for original series that could be streamed over the internet and often binged in a single evening. But, increasingly, the company's future hinges on live events.
"They drive ad revenue, fandom. They're also a promotional platform," Netflix $(NFLX)$ co-CEO Greg Peters said about such events on the company's Thursday afternoon earnings call.
He noted that Netflix may spend 5% of its content budget on live events in 2026, even as it expects that programming to command only a 1% share of viewing hours. The company sees live events as a way to bring in new subscribers in a competitive streaming market: Six of the busiest 10 days for new-member signups within the past five years were tied to live events, according to the company's shareholder letter.
Live sports are also helpful from an advertising perspective, said MoffettNathanson analyst Robert Fishman. He wrote on Friday of "an opportunity for Netflix to press the gas on advertising by getting bigger in sports," a move he thinks could drive higher ad prices.
Of course, betting on sports rights isn't a slam dunk. Traditional networks hold season-long rights to an array of games, but even Netflix's strategy of picking and choosing among live events is getting expensive. Netflix's Christmas Day NFL games cost a reported $150 million per year, for instance. Costs for boxing and MMA matches have yet to be publicly disclosed.
Netflix's free cash flow in the second quarter fell 33% relative to a year before. The company expects content expenses to increase 10% for the full year, although revenue is anticipated to grow more quickly, at a 13% to 14% clip.
Investors don't seem convinced that the company's spending is paying off. Shares are down more than 10% in morning action on Friday following mixed financial results, extending a stretch of deep underperformance. The stock had slumped 46% in the past year through Thursday's close. During that time, the S&P 500 SPX has climbed 20%.
"As the leading content distribution platform, Netflix ultimately needs to broaden its value proposition to maintain its position over time," Bernstein analyst Laurent Yoon said in a note to clients after the report.
The company now has the rights to air live games and events in popular sports including football, baseball, boxing and wrestling.
Whether the company is spending on the right things remains to be seen. Monday's MLB Home Run Derby on Netflix drew just 5.3 million viewers, down from the 5.7 million viewers ESPN/ESPN2 $(DIS)$ drew for the event last year, and was the least watched derby since 2003, according to Austin Karp of Sports Business Journal.
The ratings show that "while sports is king in most sought-after rights to broadcast, sports events aren't equal in level of public awareness," Jacqueline Corbelli, the CEO of BrightLine, a technology-software company that specializes in television advertising, told MarketWatch.
Now Netflix may be planning to expand its global push into live content further, beyond sports. The Wall Street Journal reported earlier this month that the company was considering adding TV channels to its mix.
The company didn't immediately respond to a request from MarketWatch for comment.
Netflix revealed in its engagement report that viewers spent more than 97 billion hours watching content on the platform during the first half of the year, up 2% from the more than 95 billion hours that Netflix had disclosed for the same period a year before. Sluggish engagement growth has been a source of investor concern.
"The main goal of these events, beyond generating viewership in their own right, is to bring more people onto the service who will then spend time there after the event," Tyler Aquilina, a media analyst at Luminate Intelligence, told MarketWatch. "In that sense, the strategy doesn't seem to be working too well."
While some popular live sporting events like NFL games can be considered appointment viewing, analysts say that some one-off events like the Home Run Derby and MMA fights are harder to get fans excited about, particularly if there's not a massive marketing push behind them. On the flip side, boxing matches featuring the likes of Jake Paul tend to benefit from a strong marketing push and higher general awareness due to the fighters' fame.
"Why would viewers know it's being broadcast there?" Corbelli asked of the Home Run Derby.
Some analysts believe Netflix should be more choosy with its live-sports events, even if the rights tend to be more expensive.
"Not everything is a playoff, championship or otherwise high-profile sports event that we will naturally scour the viewing expanse we call television to find," Corbelli said.
"Different events might be helpful," Aquilina added. "I'd be very surprised if Netflix doesn't continue to pick up more NFL rights. They've already added three additional games for the upcoming 2026 season."
From the archives: Will a Super Bowl only be available on a streaming service? 'That's where this is all headed.'
But there are signs that Netflix has made a savvy bet heading into 2027.
This summer's FIFA World Cup has shown that the appetite for elite soccer-tournament viewing is global and massive, with the U.S. men's team drawing record ratings for several of its matches.
And that's good news for Netflix, because the FIFA Women's World Cup will be broadcast exclusively on the streaming service in 2027.
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-Weston Blasi
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July 18, 2026 14:54 ET (18:54 GMT)
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