Netflix’s decision to get into business of streaming WWE wrestling programming could give the streamer’s advertising business a boost, according to Wells Fargo analyst Steven Cahall.
Scaling up its ad tier has been a priority for Netflix, which most recently claimed to have 23 million active monthly users globally. (Netflix might update the figure later Tuesday when it reports fourth-quarter earnings.)
Cahall called the WWE deal “a big move by Netflix into live entertainment, though not quite sports … We think this is part of Netflix’s aim to accelerate ad scale and grow subscriptions and revenue beyond paid sharing.”
WWE’s Raw program, which will move to Netflix in 2025, draws about 1.7 million average weekly viewers on cable TV’s USA, Cahall estimates. That equals 7.2 billion impressions weekly over the Monday-night show’s three hours, which would generate about $200 million in annual ad revenue.
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For Netflix, which would draw more viewers than cable can, annual ad revenue could reach $260 million a year, which would be about 15% of how much Cahall had expected Netflix’s ad business to generate in 2025.
“We’d guess that ad-free Netflix subs will still get advertising during WWE’s commercial breaks,” the analyst said.
Cahall noted that NBCUniversal broke even on its deal with WWE for Raw. NBCU did not renew Raw but picked up SmackDown, which had been distributed by Fox. NBCU’s Peacock has North American rights to the company’s premium live events such as WrestleMania.
“We think Netflix’ No. 1 focus is driving scale in ads as it needs reach and frequency to carve out a seat at the top table with U.S. ad buyers,” Cahall said.
While tier pricing can help push subs to AVOD, ad-supported content that runs across tiers is an accelerant to ad scale, especially in the US where WWE is watched by nearly 2 million viewers for 2-plus hours a couple of nights per week,” Cahall said.
The problem with WWE is that it attracts a narrow, young male demo, so Netflix might need more live content to further expand its audience reach, Cahall said.
“This is hardly a ‘bet the farm’ deal for Netflix,” Cahall said. “It adds to Netflix's ability to continue to look for growth beyond paid sharing as new content equals more ads and/or more subs. The inevitable question is, ‘When will NFLX get into live sports?’ but we think that's still years away given the gap between major sports rights and a WWE deal at $500 million annually.”
