Netflix focuses on Sports Entertainment with WWE & NFL

& Sonic the Hedgehog 3 takes franchise past $1 billion in Box Office revenue + Paris Saint-Germain ends partnership with Talon Esports

Author

Joe Condon
January 07, 2025

Hey folks - welcome back to Edition #41 of The SEG3 Report & the first of 2025!

We hope you had the chance to recharge your batteries and are ready for what is lining up to be one of the biggest years to date for those of us at the intersection of culture & emerging technology.

Right, let’s get into it!

Contents: Edition #41

Netflix & Sports Entertainment with WWE & NFL

Netflix ended 2024 with a flurry of sports entertainment content being live streamed across their platform - from Jake Paul & Mike Tyson, to the NFL Christmas game and most recently (as of this today/yesterday depending on where you are on the globe), WWE’s first show of a 10-year deal to bring Raw, Smackdown & Wrestlemania to the platform.

Why You Should Care

TL;DR: Netflix may not be the salvation that traditional sports is hoping for, but the trend of them acquiring more sports entertainment, which brings along with it the potential for more shoulder programming/behind the scenes content seems to be a winning package the streaming giant is looking for. Especially if the reported cost is similar to them producing a ‘mid-level’ film, which does not bring the same level of stickiness, repetitiveness & fandom that live sports content does. The key here however is sports entertainment - so for other sports to attract Netflix’s attention, the proposition will likely need to be an evolution from their traditional product.

In full: There has long been conversation about the streaming/tech giants and their appetite for live sports rights. Amazon, Disney & Apple have all been active over the last few years, with deals with the MLS, NFL and more.

Despite Netflix’s record with behind the scenes content (F1’s Drive to Survive etc), they hadn’t really ventured into live sports - this did however change late last year. Influencer boxing, NFL’s Christmas Game (with a half-time show from Beyonce) & now WWE, the pinnacle of sports entertainment, moving for the first time away from traditional broadcast partners to Netflix.

Why?

Netflix has 283 million subscribers, and distribution to most of the globe, whilst also having a more accessible subscription model in comparison to legacy media businesses that have long been the holders of sports rights.

And as we know, unlocking a new, younger audience is essential for many sports brands, who have an ageing fanbase. Netflix helps them to do this, with it reported that 75% of 18-34 year olds in the US having a Netflix subscription (which you would imagine is replicated across most countries globally).

Brandon Reigg, Netflix’s VP of Unscripted & Documentary Series said exactly that when talking about the WWE deal:

“I think because we’re in so many of these countries where they haven’t had a real distribution before, there’s an opportunity for them to build up wrestlers from major regions that they have not explored fully in the past.”

Brandon Reigg - VP of Unscripted & Documentary Series, Netflix

So for WWE, the partnership can help to unlock new markets, and enable them to do what they do best - make global stars with great stories.

It is, however, a two-way street. As much as Netflix could help to grow subscribers, they are being strategic in their acquisitions - all of which have an element of entertainment to them, which they’re hoping will A) be a draw to Netflix for new subscribers (sports fans) to the platform, who will then discover other content on the platform and stick around, B) help them to bring more BTS content, which has been a winning format for them in the past, and C) support their advertising efforts on platform (given the breaks between plays that the NFL and other sports brings).

The kicker here is that although the investment from Netflix into hosting the NFL Christmas Games could be seen as a large number (reportedly $75 million per game), it is but a drop in the bucket of Netflix’s annual programming budget of a reported $17 billion, with some of their premium series reportedly requiring around 35-50 million per series.

So whilst the NFL (and WWE) exceed that investment, the monetisation opportunities, shoulder programming opportunities and stickiness of sports fans means that the investment into sports content could quite easily give a good return for Netflix.

And with the headwinds facing legacy media brands and their business models, it will certainly be interesting watch to see what else Netflix and other streaming/tech giants have in the pipeline as they (potentially) look to ruffle some feathers in 2025…

The Sonic franchise clears $1 billion in Box Office

The "Sonic the Hedgehog" film franchise has surpassed $1 billion in global box office revenue, with the latest instalment, "Sonic the Hedgehog 3," contributing over $187 million in the US and surpassing $100 million internationally, totalling more than $336 million worldwide.

Why you should care?

TL;DR: SEGA have doubled down on their transmedia efforts, and it's paying dividends, in the box office, and beyond. These stories on film & TV are helping to grow the franchise and depending on the lifecycle of the IP, either drive awareness, relevance, retention, acquisition, re-acquisition or monetization of the fan. It doesn’t look like game IP being the main source of stories for film & TV is going to slow up any time soon.

In full: The small blue has made some big green - now crossing the $1 billion mark at the global box office, with Paramount Pictures reportedly having green-lit the fourth instalment owing to its success.

The sonic brand is proving to transcend generations, and continue to attract a number of age groups to the big screen - but as those of you who attended SEG3 LA will know, SEGA are doubling down on their transmedia efforts, and the big screen is just one piece of the jigsaw.

There are numerous mediums/channels that brands like SEGA are using to engage and monetise their audience, whilst growing the franchise/IP - whether it be new storylines to grow the lore (think the Knuckles series, which we covered in Edition #8), merchandise - which to paraphrase Justin Scarpone, EVP Global Head of Transmedia from SEGA from our LA show, is a great way to tell stories - all the way to location based entertainment and much more.

All of these initiatives/activations/stories have to add to the master narrative around the franchise and complement the product & marketing mix, with the objective to drive:

  • Awareness

  • Relevance

  • Retention

  • Acquisition

  • Re-acquisition

  • Monetization

Amongst the audience and fanbase.

Gaming & interactive storytelling is certainly no longer the ugly stepsister or an after thought for studios, and those that are smart and long-term in their partnerships with game developers (rather than extractive/MG led) will be extremely well positioned to succeed over the coming years.

Peter Levin, Co-Founder & Managing Director of Griffin Gaming Partners, put it better than I ever could also at our LA show, summarising this shift as:

“Instead of being a hub-spoke model where gaming & interactive storytelling is the spoke, it may end up inverted where gaming ends up being the hub and the other extensions the spoke…and in success management teams will have a much more intimate relationship with that fanbase - they’ll have more data, more touchpoints and more opportunities to communicate”.

Peter Levin - Co-Founder & Managing Director, Griffin Gaming Partners

SEGA continues to understand this, and have variety of launches (away from Sonic) coming in 2025 across a number of touchpoints - which you’d expect will further lay the groundwork for continued growth of their franchises this year and beyond.

Paris Saint-Germain & Talon Esports end League of Legends partnership

Talon Esports and Paris Saint-Germain (PSG) have ended their four-year League of Legends partnership. During their collaboration, the team known as PSG Talon, achieved significant success, winning multiple Pacific Championship Series (PCS) titles and representing the region at international events like the Mid-Season Invitational and World Championships.

Why you should care

TL;DR: Buy-ins for esports biggest titles are high - given PSG’s early commitment to esports, and non-sim titles, this could just be a step-back to re-evaluate, and decide where their investment into wider gaming (as a whole) is best spent.

In full: PSG (alongside Schalke & later Wolves) have been some of the OG’s when it came to sports brands entering non-simulation esports titles - and have seen a lot of success alongside Talon in Riot Games’ title, League of Legends.

The end of the partnership doesn’t seem terminal (there seems to be willingness to revisit at a later date between PSG & Talon), and as far as I can see, they’re still partnered together for their Rainbow Six Siege team, so will be continuing their esports presence - but it is however a lighter one than before.

Does this mean esports isn’t delivering the value for PSG anymore?

Maybe. Maybe not.

The move to non-sim games certainly broadens the brand appeal, but without having the numbers to hand, it is hard to know whether their presence in LoL and esports as a whole has helped to drive growth/new fans back to their football/soccer operations, with this side of the business likely funding their expedition into esports.

And with buy-ins for franchise slots in some of the largest titles across esports reportedly ranging from anywhere between $10-30 million for certain league (although I would imagine this is subsidised given their partnership with Talon, who will also contribute), it could be that the return is not justifying the investment at the moment.

Despite the step-back from PSG at the moment, I’m still optimistic that with the right partnership, at the right time, in the right title, targeting the right audience (think NASCAR x BLAST), esports can be a smart way for traditional sports brands to grow their brand and audience to a younger, more digital native fan.

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