Find out what this Netflix and Spotify move means for sports, entertainment, and your portfolio.
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The future of streaming media is about to get even more interesting. I certainly didn’t see it coming, and I’m sure no one else did either. Last week on Netflix (NASDAQ:NFLX) and Spotify (NYSE: Spot) We’ve teamed up to bring some of Spotify’s top podcasts to the video streaming veteran’s global platform.
Netflix and Spotify’s groundbreaking podcast partnership is more than just a content deal. This is a glimpse into a fundamentally different entertainment ecosystem. Former rivals form alliances, audio-only podcasts become TV shows, and the very definition of “content” becomes beautifully chaotic and fluid.
This is an evolution in streaming that no one expected. Professional platforms are finally realizing that collaboration can be the ultimate competitive advantage.
what’s happening?
Starting early next year, some Spotify podcast shows will be available on the Netflix service in the US. This partnership begins with several true crime talk shows, a massive pop culture and lifestyle show, and a truly heaping array of sports-oriented podcasts. Other markets will have access to these series in the future, but the exact timing and geographic scope is unknown.
Spotify believes this partnership is an effective way to increase people’s access to these podcasts, including ultra-premium ones like “The Bill Simmons Podcast.” As a reminder, Spotify paid Simmons $185 million for Ringer Studios in 2020, and will likely pay even more for the March 2025 contract renewal.
Netflix executives emphasized that video-style podcasts are growing in popularity, creating one more content type for subscribers to enjoy.
Netflix lets you get sports content for cheap
It’s a stroke of genius on both sides of the negotiating table, but it’s likely that Netflix will get a better end of the deal.
Netflix suddenly and very quickly expanded its coverage of a fast-growing sport by acquiring podcast rights without paying billions of dollars for direct event coverage contracts. Leagues like the NFL, NBA, and MLB want large sums of money for game tracking contracts. for example:
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comcast’s (NASDAQ:CMCSA) The NBCUniversal division is reportedly nearing a three-year deal with Major League Baseball worth $200 million annually.
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The National Basketball Association signed an 11-year media deal in the summer of 2024, splitting rights between NBCUniversal and Amazon. (NASDAQ:AMZN) Prime Video and Walt Disney (NYSE:DIS) ESPN makes about $7 billion a year.
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When it comes to the National Football League, Netflix has its hands in some specific games, but the big deals are elsewhere. Comcast, Disney, Paramount Skydance (NASDAQ:PSKY)Amazon and Fox (NASDAQ:FOX) They all pay billions of dollars a year for their portion of NFL media rights. YouTube also entered the space as Alphabet (NASDAQ:GOOG) (NASDAQ:Google) The subsidiary entered into a seven-year agreement to indemnify Sunday Ticket for $2 billion a year.
Financial details of the Netflix and Spotify partnership are unclear, but there are indications that the payments may be small enough not to require disclosure. After all, both partners expect positive results from this deal. But even though Netflix spent hundreds of millions of dollars, it found a cheaper way to tap into the lucrative sports market.
Audio meets video (and more)
I consider podcasts to be an audio-centric media format, and this deal was an eye-opener. Adding some high-end cameras and proper lighting to a radio-like studio creates a video stream instantly instead, and many people prefer that format. From a podcast producer’s perspective, I don’t think it’s a bad thing to upgrade your studio environment and pay more attention to visuals.
This results in smeared edges and borders between different content types. Spotify offers video content, and Netflix is adding audio-centric programming. And it doesn’t end there. So Netflix already has dozens of video games, and the mobile Spotify app has a hidden “Snake” game. Digital entertainment is digital entertainment, which allows experts in a particular media type to easily expand into other areas.
This is especially true for the wealthy global giant that entered the video streaming industry in 2011. Netflix has the resources to continue growing its business by exploring new media types. Recent examples include brick-and-mortar stores and upcoming Netflix House experience centers in Philadelphia and Dallas.
Anders Byland has held positions at Alphabet, Amazon, Netflix, and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Amazon, Netflix, Spotify Technology, and Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
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