If successful, such a deal could increase the fund's influence in European football as DAZN is a broadcasting partner for Italy's Serie A, Spain's LaLiga, Germany's Bundesliga and France's Ligue 1.
PIF, chaired by Saudi Crown Prince Mohammed bin Salman, is part of a consortium that owns English Premier League football club Newcastle United as well as other Saudi Pro League clubs including Al Nassr, where Portuguese footballer Cristiano Ronaldo plays.
The fund has discussed investing around $1 billion for about a 10% stake in London-based DAZN, the people said, speaking on condition of anonymity as they were not authorized to speak publicly.
Discussions between PIF and DAZN have been ongoing since late last year but are not advanced, one of the people said, cautioning there is no certainty a deal will happen.
DAZN has held conversations with at least three investment funds in recent months over various strategic partnerships and is seeking an overall valuation of $10 billion to $12 billion in a potential deal, a third person with knowledge of the process said.
Representatives for PIF and DAZN declined to comment.
DAZN, which competes against traditional TV and satellite channels, provides access to a range of sports content, which also includes American football, boxing and baseball over its online streaming platform.
It would be the first streamer of its kind to attract possible investment from PIF, which has poured billions into other high-profile sports such as Formula 1 and golf in recent years.
DAZN acquired rights in September to broadcast the Six Kings Slam, a new elite tennis exhibition featuring Novak Djokovic and Rafael Nadal in Riyadh later this month.
It also broadcasts the Saudi Pro League in several territories and the Riyadh Season series of boxing matches, according to its website.
DAZN's revenue jumped by 41% to $2.1 billion in 2022 as it increased subscription prices and added domestic streaming rights to Bundesliga and Serie A to its platform, according to its latest results.
However, it recorded an operating loss of $1.06 billion due to increased rights costs.
DAZN had been in talks with advisers last December to raise as much as $1 billion to boost its streaming-rights portfolio, Bloomberg reported.