The Streaming Pivot No One Saw Coming: Netflix Embraces Spotify's Premium Podcasts

The future of streaming media just got a whole lot more interesting. I certainly didn't see it coming, and I bet no one else did either. Last week, Netflix (NASDAQ: NFLX) and Spotify (NYSE: SPOT) teamed up to put some of Spotify's top podcasts on the video-streaming veteran's global platform.

Netflix and Spotify's groundbreaking podcast partnership isn't just another content deal. It's a glimpse into a radically different entertainment ecosystem. Former rivals become allies, audio-only podcasts turn into TV shows, and the very definition of "content" becomes beautifully, chaotically fluid.

This is the streaming evolution nobody saw coming: Specialist platforms finally realizing that collaboration might just be the ultimate competitive advantage.

What's happening?

Early next year, you'll see a handful of Spotify podcast shows on the American Netflix service. The partnership starts with a couple of true crime talk shows, a larger set of popular culture and lifestyle shows, and a really heaping helping of sports-oriented podcasts. Other markets will gain access to these series later, though the exact timing and geographical reach remains unknown.

Spotify sees the team-up as an effective way to grow people's access to these podcasts, including ultra-premium stuff like The Bill Simmons Podcast. As a reminder, Spotify paid $185 million for Simmons' Ringer studio in 2020 and presumably even more for a renewal of that deal in March 2025.

Netflix's management highlighted the growing popularity of video-style podcasts, giving subscribers one more content type to enjoy.

Image source: Getty Images.

Netflix gets sports content on the cheap

I think it's a stroke of genius from both sides of the dealmaking table, though Netflix probably gets the sweeter end of this deal.

Netflix suddenly expands its burgeoning sports coverage very quickly by getting podcast rights, and without paying billions of dollars for direct event coverage deals. Leagues like the NFL, the NBA, and MLB want a lot of money for their game-tracking deals. For example:

• Comcast's (NASDAQ: CMCSA) NBCUniversal division is reportedly close to a three-year deal with Major League Baseball, priced at $200 million per year.

• The National Basketball Association signed an 11-year coverage deal in the summer of 2024, splitting the rights among NBCUniversal, Amazon (NASDAQ: AMZN) Prime Video, and Walt Disney's (NYSE: DIS) ESPN for about $7 billion per year.

• As for the National Football League, Netflix has nibbled on a few specific games, but the big contracts are found elsewhere. Comcast, Disney, Paramount Skydance (NASDAQ: PSKY), Amazon, and Fox (NASDAQ: FOX) are all paying billion-dollar sums per year for their specific slices of NFL media rights. Even YouTube entered this arena, as the Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary inked a seven-year deal for Sunday Ticket coverage at $2 billion per year.

The financial details of the Netflix/Spotify partnership are not known, which suggests the payments may be small enough to not require public disclosure. After all, both partners are expecting positive outcomes from this contract. But even if Netflix is spending a few hundred million dollars, it still found a cheaper way to tap into the lucrative sports market.

Audio meets video (and beyond)

I think of podcasts as an audio-centered media format, but this deal was an eye-opener. Adding a few high-end cameras and decent lighting to the radio-like studio instantly creates a video stream instead, and a lot of people prefer that format. From the podcast creators' point of view, I'm sure it doesn't hurt to upgrade the studio environment and pay more attention to the visuals.

So the edges and borders between different content types are getting smudged. Spotify is doing video content and Netflix is adding audio-centric shows. And it won't stop there. I mean, Netflix has dozens of video games already, and there's a hidden "snake" game in the mobile Spotify app. Digital entertainment is digital entertainment, and specialists in one particular media type can easily expand to other fields.

That's particularly true for the well-heeled global giant that started the video-streaming industry in 2011. Netflix has the resources to keep its business growth going by exploring new media types. Recent examples even include brick-and-mortar stores and the upcoming Netflix House experience centers in Philadelphia and Dallas.

Anders Bylund has positions in 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.