Vince McMahon is an entrepreneur—in the truest sense of the word.
The billionaire’s latest venture will see the launch of the much-talked about WWE Network; an all-singing, all-dancing, subscription-based online video streaming service.
Such grandiose plans have attracted celebration and scepticism in equal measure. And while some have speculated that this latest concept could be doomed to the same fate as McMahon’s infamous XFL concept, since the Network’s launch date was confirmed back in January there has been a general feeling of positivity amongst fans and critics alike.
Analyst Brad Safalow, founder and CEO of PAA research, believes that the venture could well be a hit, claiming that the WWE “should not have any issue getting to profitability”.
And if recent WWE pay-per-view buyrates are anything to go by, such faith in the Network could indeed be rather well placed.
Q3 results are in—a period that covers the three months October, November and December of 2013. And in terms of PPV buyrates at least, the figures make for fairly good reading. 700,000 buys easily beats the 2012 total of 582,000—and by a fair distance of 118,000. However upon closer inspection, everything is not as rosy as it seems.
We must consider the context of 2013, and the fact that we saw an extra PPV squeezed in to that already-crowded end of year schedule. The extra show in question, Battleground, yielded 114,000 buys. That makes it one of the least-purchased PPVs in recent history.
And though ignoring those 114,000 buys keeps 2013 ahead of its previous year (by just 4,000 buys), if we take an average buyrate figure for the period 2013 comes up short.
Does the Q3 fall in average buyrates reflect a dip in the quality of WWE pay-per-views?
In fact, 2013 marks the lowest Q3 average buyrate since the unofficial end of the brand split back in 2007.
Furthermore, the years 2007-11 also saw an additional October PPV (the interloping events including Cyber Sunday, Bragging Rights and a rehash of Vengeance). In each of these years, the additional October show drew more buys than last year’s Battleground.
And while there’s an argument that Battleground suffered from being a debuting concept, the same can be said of Bragging Rights in 2009. Similarly, many felt Battleground was under-hyped somewhat due to a mere three week build—but each event of 2007-11 were also only granted a mere 21 days to build the show.
Long story short, PPVs buyrates are dropping—which is exactly why this is the ideal time for the WWE to launch their Network.
The long-term significance of the Network has rarely been questioned—the more pressing issues have always regarded the immediate ease of making that jump from one model to another. With interest in the standard cable approach seemingly on the decline, the company has little to lose in making the switch to a subscription-based service.
Furthermore, with WrestleMania right around the corner, that puts us at a point in time with not only limited risk—but also of increased reward.
For the past three years, the biggest show of the year has yielded seven-figure buyrates. The breakeven point for the WWE Network has been quoted at between 800,000-1 million subscribers, with company officials citing 2-4 million subscribers as “within the realm of possibility.”
It doesn’t take a mathematician to work this one out.
Is this the perfect time to launch the WWE Network?
With risk falling and WrestleMania dawning, the time has never been better for the WWE Network to launch. The added content makes sense for the fans. The financial gains make sense for the company. And the chance to extend a legacy makes perfect sense for the Chairman of the Board.
I can’t help but feel that this could be the start of something pretty special for Vince McMahon and his sports entertainment empire.
But what do you guys think?
Please feel free to comment below and let me know your thoughts on this matter, as well as any of the other points mentioned in the article!