Why Netflix just made a $5 billion pro wrestling deal

• For years, Netflix insisted it didn't want to get into live sports.
• Now it's in "live sports entertainment" via a $5 billion pro wrestling deal with TKO.
• One big reason the deal could work: Netflix wasn't in the ads business. Now it is.

For years, people have asked Netflix executives when the company would finally start streaming live sports. Or, at least, "live sports entertainment."

Now they know: 2025.

That's when a new $5 billion, 10-year deal with TKO Group will kick in and bring Raw, the weekly WWE pro wrestling show currently airing on Comcast's USA network, to Netflix in the US and other countries.

And outside the US, TKO will also bring some of its biggest one-off events, like Wrestlemania and SummerSlam to Netflix, where they'll be included in the price of a basic subscription.

In the near term, the deal means US wrestling fans will find some of the stuff they like on Netflix and some on Comcast's Peacock service. Peacock has a TKO deal for events like Wrestlemania that runs through March 2026.

But it's much more important as a major marker for Netflix, which spent years insisting it didn't want to get into live sports. More recently, it has spent years insisting it wasn't getting into live sports, even though it was clearly building up the ability and rationale to get into live sports.

Now it's here, in what appears to be the biggest licensing deal Netflix has ever made.

What changed?

One word: Ads.

When Netflix used to insist that it didn't see value in live sports, it would point out that the biggest reason programmers pay for live sports is because live sports are huge draws for advertisers. And Netflix wasn't in the advertising business.

But that changed in the spring of 2022 when Netflix announced that it had lost subscribers for the first time in more than a decade. And, after insisting for years that it wasn't going to have advertising, the company was going to launch an ad-supported version of its service.

Ever since then, industry observers have assumed Netflix would get into sports one way or another. And that same year, Netflix bid on the US rights for Formula 1 racing — a deal that eventually went to ESPN.

At the same time, Netflix has been experimenting with one-off live events, like a Chris Rock comedy special or a golf tournament it made up called the Netflix Cup.

So: Ads? Check. Soft launch of live capabilities? Check.

The last thing Netflix needed to make a sports deal make sense? The ability to say it wasn't just "renting" sports but something closer to ownership.

That's not completely happening here, but it's kind of close: As noted above, some of TKO's rights are owned by Netflix competitors in the US and abroad. And this deal is a rights deal, not an outright purchase.

On the other hand: It's a 10-year deal that Netflix can extend by another 10 years if it's going well (or bail after five if it's not).

Just as important: While the main asset in the US is access to a single weekly live show, it certainly gives Netflix the ability to build other, on-demand programming around the WWE and its wrestlers. And outside the US, Netflix will have much more than Raw, including its major annual events like Wrestlemania.

So: Netflix doesn't completely own pro wrestling. But it owns enough to make a $5 billion deal that looks like it could make sense.