Jimmy Butler #22 of the Miami Heat dribbles against Jamal Murray #27 of the Denver Nuggets during the fourth quarter in Game Five of the 2023 NBA Finals at Ball Arena on June 12, 2023 in Denver, Colorado.
The National Basketball Association’s (NBA) decision on which companies will acquire the TV and streaming rights for its live games could have a transformative impact on the media industry. According to insiders, Comcast’s NBCUniversal, Google’s YouTube TV, Amazon, Apple, and even Netflix might challenge or join the incumbent rights holders. As of now, the discussions remain private, and the spokespersons for NBCUniversal, YouTube, Amazon, Apple, and Netflix have declined to comment.
The NBA’s media rights renewal is a significant event as it typically occurs about once a decade, with the last deal announced in 2014. The current rights deal will end after the 2024-25 season. Preliminary expressions of interest have been made between media partners and the NBA, but official negotiations cannot begin until April when the league’s exclusive negotiating window with Disney and Warner Bros. Discovery ends.
With the NFL’s media rights secured until 2033, the NBA has a unique opportunity to shape the media landscape. Live sports have continually gained value for advertisers as they seek out live events where commercials cannot be skipped. The NBA is likely to secure a substantial increase in its new media deal. Former ESPN head John Skipper predicted earlier this year that the league could receive between 200% and 350% more in its new agreement. An NBA spokesperson stated that their next set of media deals will shape the future of their league and how fans consume NBA basketball for years to come.
Netflix’s potential interest in the NBA could be a game-changer. Co-CEO Ted Sarandos previously stated that Netflix had not found a profitable path for carrying live sports. However, recent reports suggest that Sarandos has softened his stance and is now potentially interested in the NBA. While it is uncertain what this means, it is unlikely that the NBA would entrust its largest package of streaming games to a provider with no previous experience in live sports. Netflix had previously attempted to secure live Formula 1 racing rights but was unsuccessful.
One significant change for Netflix is its push to attract customers to its advertising-supported tier, which was launched in November. As of May, approximately 5 million subscribers had signed up for the ad-supported tier, indicating that Netflix generates more revenue from these subscribers than its standard tier. Adding a package of NBA games to its service could further increase the average revenue per user for the ad-supported tier, as NBA games would command premium ad rates not currently seen on Netflix’s platform.
Disney and Amazon have also adjusted their streaming offerings to accommodate the growing demand for digital advertising and to match or surpass the revenue generated by their higher-priced ad-free subscription products. Disney plans to increase the pricing for its ad-free Disney+ tier, while Amazon intends to inject commercials into its previously ad-free Prime Video by 2024.
The NBA would be a valuable addition to an ad-supported streaming service due to its season running from October to June, including playoffs. This consistency would reduce churn for fans who cannot binge-watch a season of live games as they would with on-demand entertainment series.
The NBA features an array of international stars, making it appealing for ad-supported streaming services with global reach. Netflix currently sells an ad-supported plan in multiple countries, including the United States and several European and Latin American countries. The NBA is known for its international players, such as Luka Dončić, Nikola Jokić, and Victor Wembanyama, and leveraging its global reach could be a significant advantage for potential streaming partners.
Google’s YouTube TV has impressed NBA executives with its production quality and user experience, making it a potential streaming partner for the league. YouTube TV recently secured a deal to be the NFL’s exclusive “Sunday Ticket” provider, demonstrating its commitment to live sports. YouTube’s extensive global user base of over 2.7 billion monthly active users also allows for targeted marketing of the sport, particularly to a younger audience.
Between Amazon and Apple, the NBA is currently leaning towards Amazon as a potential streaming partner due to their proven investment in live sports, such as their contract to carry “Thursday Night Football.” Although Apple has secured deals to carry Major League Soccer and “Friday Night Baseball” for Major League Baseball, the NBA has doubts about their commitment to promoting NBA games. Apple TV+ has not disclosed its subscriber count.
As the NBA considers its options, it must strike a balance between meeting demand and maximizing the price for rights. The league aims to have just two or three media partners that can cater to broadcast, cable, and streaming audiences. The NBA hopes to drive fans to its NBA app and NBA.com, which will serve as digital “front doors” to discover content and eventually link them to streaming services to watch games. The objective is to simplify the viewing experience for consumers and avoid overwhelming them with numerous options.
The NBA’s decision on its new media deal will have significant repercussions for the industry, shaping the future of how fans consume basketball. With numerous potential partners vying for the rights, including traditional media giants and streaming platforms, the NBA is in a prime position to secure a lucrative deal that benefits both the league and fans worldwide.
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