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Sunday, February 25, 2024
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The Role of Live Sports in Streaming

Design: Alex Brooks

Over the past few weeks, several of the world’s largest streaming services released earnings reports, with tepid results across the board.. Netflix’s January earnings showed signs that the streaming giant’s growth was slowing, with the company reporting its lowest subscriber growth figures since June of 2020.

In the past, Netflix has claimed that competition from other streamers would not impact its ability to grow, but the surge in popularity from services like Disney+ and Apple has seemingly hampered Netflix’s ability to grow at the same rate investors have become accustomed to.

Meanwhile, Disney reported earnings with very different results. The mouse posted strong growth, particularly in its streaming services. The company saw 34% year-over-year revenue growth in the fiscal quarter ending Jan. 1. The company’s still fledgling streaming division has posted impressive growth, but the business line has yet to reach profitability.

While revenue from linear media networks were flat at $7.7 billion, Disney saw impressive growth in streaming, as its direct-to-consumer channels grew 34% to $4.7 billion. Streaming remains a money loser, however, with a $593 million operating loss – relative to Netflix who was profitable over the period.

Streaming Competition Leads to Customer Churn

More recently, streaming companies have struggled with customer retention due to competition. In order to retain customers, services such as Netflix and Disney+ have seen their expenditure on content skyrocket, with the average spend nearly doubling from 2017 to now.

One potential way for streaming services to up retention? Live sports. 

In early February, S&P Global Market Intelligence published a report detailing the ways in which streaming video on demand (SVOD) providers could benefit and draw “stickier” customers through live sports.

In this week’s Scouting Report, we examine the demand for and relationship between live sports and SVOD providers with a specific case study on Disney’s current ESPN dilemma. Within the report, we dive into::

  • An examination of Netflix and Disney earnings
  • Analysis on why customers from large streamers churn
  • The potential impact of adding live sports to content libraries
  • A brief case study on Disney and ESPN

Check out the full report here.

ICYMI: Last month, we published a new Heat Check on the Super Bowl Ad Market and the record spending we are seeing in 2022. You can access that report along with our entire catalog of research at Insights HQ.

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