More than 300 million households will be watching an unusual boxing match this weekend. My twin sons and I will be among the viewers. The fight features a 58-year-old convicted felon and a 27-year-old social media influencer.
Mike Tyson, the former heavyweight champion, will jostle with Jake Paul, who is a specialist in YouTube videos. The match-up will be broadcast live by Netflix from a stadium in Arlington, Texas. Tyson retired 19 years ago. He is well below his prime. His waistline has expanded, and his hair has receded since his glory days.
Tyson was unstoppable in the 1980s when he knocked out 75% of his opponents. Most of his fights ended in the first round. He is, by common consent, one of the greatest boxers ever. He became the youngest ever to hold a heavyweight title (at age 20). His career spanned 20 years, from 1985. He has a record of 50-to-six with 44 wins by knockout.
Paul launched a YouTube channel in 2014. He pursued acting and music before commencing a pro-boxing career in 2020. His record is more modest than his older opponent. He has a nine-to-one record with six knockouts. He is younger and fitter, but boxing is a sideshow in his career. He is more famous as a punchy podcaster than for his ability in the ring.
Despite the age and pedigree of the fighters, tickets have been brisk in sales. Paul and Tyson could make US$60 million ($80.2 million) from the bust-up. Tyson may not complain despite the risk of injury. In fact, the fight has the potential to be one of the most watched fights of all time. Netflix has used its vast reach to promote the event. The fight’s following unites grey-haired fans of Tyson like myself and teenaged YouTube watchers like my sons.
The fight may not be remembered only for its boxing. It represents a seismic shift in sports and entertainment. Live sports has long been a monopoly of pay TV operators. The trend started with The Rumble in Jungle, a fight that took place exactly 50 years ago last month. Muhammad Ali faced George Foreman in Kinshasa, Zaire, for the world’s heavyweight championship.
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It was the first professional sporting event that was broadcast to a worldwide television audience. The fight was broadcast to live audiences in America. It was a pay TV event, which was then a novelty. The sporting coverage that we take for granted today, such as the F1, Wimbledon and the English Premier League, had its roots in that 1974 bout.
The Tyson-Paul fight could mark a similar shift from pay TV coverage of sport to streaming. Netflix is investing heavily in live-streaming sports. Aside from the Tyson-Paul fight, it streamed a tennis event, The Netflix Slam and a golf event, The Netflix Cup.
Netflix is also about to air Monday Night Raw, a wrestling show, next year. Last month, Netflix inked a three-year deal with the National Football League to air games on Christmas. Other streaming companies like HBO and Disney are also entering sports.
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Pay TV viewership has been falling over the last decade. Pay TV penetration in the US has dropped from 84% in 2010 to 64% today. It is said that a quarter of American households are planning to cut the cord. In Singapore, at least 200 households cut their StarHub CC3 subscription every week. The only factor that has kept pay TV alive has been sports and news coverage. The EPL is shown on StarHub.
Netflix’s foray into live sports will hasten the end of pay TV. It means that the axe is about to fall on pay TV. Saugato Banerjee is the founder of Super Content Company, or Super CoCo, a company that is looking to make sports coverage more efficient in Asia. He is confident that pay TV providers will be eclipsed by the streamers.
The sports media market is worth US$400 billion. It could rise threefold to US$1.2 trillion in the next decade. Streaming may take a chunk of that rise. Netflix is valued at 45 times P/E and is at an all-time high of US$820. This is even higher than the Covid-19 peak. However, the market’s enthusiasm for streaming could be because of the potential of sports. Sports coverage may add power to Netflix’s punch.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era
