Why Streaming Giants Are Betting Big on Live Sports

With negotiations ongoing around the National Basketball Association’s (NBA's) next broadcasting deal, it should come as no surprise that some of the biggest streaming companies are reported to be involved, as streamers like Netflix (NFLX) and Amazon (AMZN) place increasingly large bets to broadcast sports events.

In recent weeks, the NBA has been reported to be in negotiations or have framework deals with Amazon to start streaming games on Prime Video, NBCUniversal to broadcast games on NBC for the first time since 2002 and stream them on Peacock, as well as potentially continue its current arrangements with Disney's (DIS) ESPN and ABC, and Warner Bros. Discovery's (WBD) TNT.

The NBA negotiations represent the latest bet on sports as a potential source of revenue growth for streaming companies, a growing trend over the past several years. Sports have dominated TV ratings, taking up nearly all the most-watched programs of the year, largely thanks to the massive draw of National Football League (NFL) games, while the recent NCAA Division I women's basketball tournament smashed previous records.

Netflix

Netflix has waded into the sports arena over the last few years in a number of ways, both in the documentary space like its behind-the-scenes looks into the worlds of Formula One racing, tennis, and golf, and in live programming.

The streamer has experimented with live programming like exhibition golf and tennis matches between stars of its documentary series, and made an even bigger bet earlier this year as it paid a reported $5 billion to become the exclusive broadcaster of World Wrestling Entertainment (WWE) events like its weekly “RAW” show, as well as annual events like “Wrestlemania.”

Amazon Prime Video

Amazon has made massive bets on sports programming for Prime Video, and is set to enter its third season airing the NFL's "Thursday Night Football" this fall.

Last week, Amazon and the NBA reportedly reached a framework agreement to broadcast "significant regular-season and postseason games, perhaps even some conference finals," and that "the final contract will be for at least a decade and begin the 2025-2026 season."

The league has one year remaining on nine-year contracts that pay a reported $2.6 billion per year total from Disney-owned ESPN and ABC, along with Warner Bros. Discovery's TNT.

YouTube TV

YouTube TV, which is owned by Google parent Alphabet (GOOGL), has become one of the largest live TV streaming services, which has included investment in sports.

Earlier this year, YouTube TV finished its first season owning the rights to NFL Sunday Ticket, the league's service that lets viewers watch every out-of-market game, after buying the rights away from DirecTV for a reported $2 billion per year.

Peacock

Peacock launched as the streaming arm of an existing broadcasting company, NBCUniversal, which is owned by Comcast (CMCSA). The company has leveraged its existing broadcasting deals for programming for Peacock, streaming events like international soccer and the WWE (before it heads to Netflix next year), and is set to air programming during the Olympics this summer.

Peacock also drew large audiences when it broadcast an NFL playoff game earlier this year, with league officials saying it likely wouldn't be the last time playoff games are exclusively shown on a streaming service.

Amid reports that NBC is looking to get back into broadcasting NBA games, which it hasn't held the rights to since 2002, a deal could mean Peacock might be in a position to start streaming NBA games if NBC manages to get part of the broadcasting rights. The Wall Street Journal reported that NBC was preparing a $2.5 billion-per-year offer to get in on the next contract of NBA rights, with intentions to broadcast games on NBC and Peacock.

Hulu

Hulu, which is also owned by Disney, has become a large streaming provider of all kinds of live TV, including sports. The company even built an advertising campaign around informing potential customers that the streamer aired live sports.

Apple TV+

Apple (AAPL) has also entered the sports broadcasting space, signing a 10-year, $2.5 billion deal for the rights to air Major League Soccer (MLS) games in 2022, with reports last year that the tech company was considering entering future bidding wars for streaming rights for the U.K. Premier League.

Apple has invested in airing Major League Baseball (MLB) games as well, paying a reported $85 million a year starting in 2022 to air prime-time "Friday Night Baseball" games.

Paramount+

Similar to Peacock, a key selling point of the streaming arm of Paramount Global (PARA) has been its access to the broadcast rights that CBS has for NFL games. That NFL viewership has also boosted Paramount's earnings in recent quarters, as the company has said Paramount+ saw double-digit growth in a number of audience metrics during the regular season that ended in January.

Warner Bros. Discovery, ESPN, and Fox Joint Venture

Earlier this year, Warner Bros. Discovery, Disney's ESPN, and Fox (FOX) announced an agreement with plans to create a joint, sports-only streaming service that analysts note could appeal to cable subscribers who want to cut the cord but don't want to lose access to live sports, while also not paying for another live TV streaming service like Hulu or YouTube TV.

Details on the service's name and pricing have yet to be announced, with some analysts voicing doubts about whether a sports-only service could be profitable, given the high costs of acquiring the rights to broadcast games.