Netflix co-CEO Ted Sarandos says that the streaming behemoth has “not seen a profit path” when it comes to “renting big sports.”
Sarandos told UBS Global’s TMT conference on Tuesday that the economics surrounding live sports are “built around the economics of pay television” and “dramatically more expensive” on streaming.
“We’re not anti-sports, we’re just pro profit. And we’ve definitely yet to figure out how to do it,” he added. “And I’m very confident that we can get twice as big without sports.”
Amazon Prime Video has acquired exclusive rights for the NFL’s “Thursday Night Football”, while AppleTV+ has struck deals for Major League Baseball and Major League Soccer.
But Sarandos argued that Netflix has been able to successfully build an enormous audience without having to depend on live sports programming.
“Imagine you had 165 million households, so maybe twice that in terms of people watching ‘Squid Game,’ without having to premiere it after the Super Bowl,” he said. “We didn’t need a big loss leader to build a big audience. And if we can keep doing that, maybe that is our structural advantage to linear television.”
Sarandos’ latest comments about sports come as streamers are looking for new ways to bolster both revenue and subscriber growth in a period of economic uncertainty.
Though 2022 was “pretty bumpy” for Netflix due in part to “unprecedented levels of competition,” Sarandos expressed confidence that the company would “reaccelerate revenue growth” in 2023 and that competitors have “a lot of room to go to catch up to us.”
As of the end of the third quarter of 2022, Netflix reported a total of 223.1 million paid subscribers worldwide. The company anticipates that number will increase to 227.59 million paid subscribers in the fourth quarter.
Sarandos’ talk at the investor conference ended with a question on Netflix’s future plans in the merger and acquisition space.
While Sarandos acknowledged that Netflix has done “some light M&A” over the last couple of years with acquisitions of companies like Scanline VFX, Animal Logic and Night School, he emphasized that the company has historically been “builders versus buyers.”
“I think we’ll probably lean on that for awhile,” he said.
Netflix stock finished down approximately 2% at the end of Tuesday’s trading session and has fallen 49% year to date.