Netflix's interest in live sports is increasing, as seen in the Mike Tyson-Jake Paul fight and NFL games.

• The much-anticipated fight between boxing legend Mike Tyson and social media influencer-turned-fighter Jake Paul will be streamed live on Netflix in July.
• According to a recent report, the boldest move into sports for the company could be acquiring the rights to exclusively stream two NFL games on Christmas next season.
• Netflix management believes that live programming generates "cultural moments" that are significant not only to viewers but also to advertisers, a new revenue stream that Netflix aims to expand.

Another player is entering the competitive world of live sports streaming.

In July, a highly anticipated boxing match will take place between legendary fighter Mike Tyson and social media personality-turned-boxer Jake Paul. This will be Tyson's first professional fight in nearly two decades, and Netflix is promoting the event as a "cultural moment" that will be of interest not only to viewers but also to advertisers.

Netflix is expanding its advertising revenue stream and aims to increase its impact on the business.

Netflix has previously characterized its investments in live sports as "sports entertainment," distinguishing them from other ventures. However, during its recent earnings call in April, co-CEO Ted Sarandos stated that Netflix is not opposed to sports but rather values profitable growth. He suggested that under certain conditions, the company could potentially increase its live sports programming.

"Our primary objective is to enhance engagement, revenue, and profit, and if we discover opportunities that can drive all three, we will pursue them across a diverse range of high-quality entertainment options. When and if such opportunities arise, we will capitalize on them, as we did in our partnership with WWE. We will assess other areas, such as sports, to determine if we can replicate those dynamics and other elements."

Recently, Netflix has hosted various one-off live sports events, including the "Netflix Cup" and "The Netflix Slam," featuring Formula 1 racers, pro golfers, tennis stars, and live comedy shows, such as the roast of Tom Brady.

Puck reports that Netflix may soon make its most significant move in sports by acquiring the rights to exclusively stream two NFL games on Christmas next season.

Netflix is taking a "deliberate path" to understand the outcome and potential benefits of live sports programming, as stated by Marty Conway, an adjunct at Georgetown University. Conway teaches courses about sports leadership and management and spent much of his career as a marketing executive for two Major League Baseball teams.

Conway stated that the purpose of the testing being conducted here is to determine the audience response and advertising marketplace reaction to various sports such as tennis, boxing, and golf.

Laura Martin, a Needham analyst, believes that Netflix's sports streaming initiatives will increase profits.

Martin stated that there is a category of advertisers who are interested in sports and this expands their advertising budget. Additionally, Netflix can attract advertisers with this type of content that they cannot obtain otherwise, as she pointed out.

Netflix has a potential advantage over its sports streaming competitors, according to Brandon Katz, an entertainment industry strategist at Parrot Analytics. The company's extensive content library can keep viewers who subscribed primarily for live sports, and its understanding of its specific audience can enhance targeted advertising.

Despite its slow growth in ad-tier subscriptions, Netflix's advertisers remain excited about its long-term potential. As of January 2024, Netflix's ad-supported tier had over 23 million monthly active users.

""I believe Netflix has successfully overcome every challenge and setback as an original content producer, and this has resulted in a strong affinity for the platform in the long term, which advertisers recognize," he said."

Netflix will likely increase its involvement in live sports, as other streaming services, such as those owned by Disney, Comcast, and AT&T, have done.

Disney and Warner Bros. announced earlier this year that they would launch a joint sports streaming service featuring all the broadcast and cable networks owned by the three companies that show sports. Apple has previously bought the rights to air Major League Baseball and Major League Soccer games. In February, Amazon signed a huge deal with the National Football League. As its exclusive deal with Disney and Warner Bros. comes to an end, the National Basketball Association could be considering new partners. Last year, CNBC reported that Netflix, Amazon, Apple, and Comcast's NBCUniversal/Peacock had expressed potential interest in a contract.

Netflix may face challenges in securing deals with major sports providers due to their high viewer penetration through other channels. It may not be beneficial for Netflix's short-term bottom line to engage in a bidding war for content they don't own and can't reuse.

"Conway stated that he knows for a fact that everyone in the pro-sports area has had conversations with Netflix officials. The issue is what each side wants, and there is currently a gap between what the current content providers, such as the NFL and NBA, offer and what Netflix is looking for."

Octagon's media rights executive, William Mao, stated that Netflix may not require more traditional live sports in the future. He pointed out that Netflix's sports strategy has been successful in focusing on "the power of the individual." Mao suggested that the upcoming match between Tyson and Paul is more about the two fighters themselves than showcasing the "pinnacle of boxing."

"Why do they need to invest in traditional sports if they are already market leaders?" Mao asked.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.