For Hastings, the challenge will be t
trying to strike a balance between spending big bucks on sports rights without hurting Netflix’s bottom line.
Amazon Prime Video is widely seen as a loss leader for the online retailer, but Bezos is willing to bear the costs of live sports and the streaming service if it means viewers spending more money on his store. everything.
One route for Hastings to cut costs could be to grab live rights to sports competitions globally, rather than picking them up country by country.
Yet making the live sport economy fraught with danger. Setanta Sports, the Dublin-based sports broadcaster that boldly bought the rights to Britain’s Premier League in a challenge to Sky, collapsed into administration in 2009 with debts of around £300m. It now operates in Ukraine and parts of Eastern Europe.
A cheaper alternative to reaping the benefits of live would be to switch to news broadcasting. Traditional broadcasters like ITV and Channel 4 have increased their investment in news coverage, believing it can help them hook up with viewers, as it remains an area streamers don’t want to touch.
Netflix would likely be reluctant to launch its own news service given the political pressures it might invite – but it could seek partnerships.
Licensing global news content, such as bulletins, from the BBC could provide Netflix with a unique offering in its English-speaking territories.
A deal could mirror the kind of co-production deals US broadcasters have already struck with UK broadcasters to make big-budget drama: UK broadcasters get exclusive rights to show the program in the UK, while the broadcaster launches it worldwide.
As Auntie struggles to bolster his trading revenue to support declining royalty revenue, Hastings may find himself knocking on an open door.
Meanwhile, Netflix seems increasingly willing to partner with rival companies to increase its market power. The streamer is reportedly looking to partner with NBCUniversal and Google to create its cheaper ad-supported tier.
In the short term, Netflix could be taking smaller bets on live streaming before agreeing on a strategy that can help shore up its subscriber base.
Four years ago, when Netflix was at its peak, such an experiment would have been unheard of. Still, Hastings’ humble decision to mirror his rivals may prove just what the streamer needs to secure his long-term future.