Biggest Takeaways from WWE's Q1 2014 Investor Call

David BixenspanFeatured ColumnistMay 1, 2014

EAST RUTHERFORD, NJ - FEBRUARY 16: Vince McMahon attends a press conference to announce that WWE Wrestlemania 29 will be held at MetLife Stadium in 2013 at MetLife Stadium on February 16, 2012 in East Rutherford, New Jersey. (Photo by Michael N. Todaro/Getty Images)
Michael N. Todaro/Getty Images

Today saw WWE's earnings' call for the first quarter of 2014, as well as the release of various updated financial documents.  As expected, WWE Network was the main topic of conversation, especially since it was made clear that there would be no discussion of the ongoing negotiations for the rights to WWE's domestic TV package.

Thanks to network start-up costs, it was well-known that WWE would be posting a net loss in Q1.  At $8 million, it was actually much better than the projected losses of $12 million to $15 million.  As I write this, the stock is up more than 5% thanks to this news.

Being a quarterly report when we already know how many subscribers there were as of WrestleMania, a week after the end of the quarter, we now have a better idea of the growth rate of subscriptions so far:

WWE Network Growth So Far
DateNumber of Subscribers
2/24/14 (Launch Day)>130,088
3/31/14 (End of Q1)~495,000
4/7/14 (Day After WM 30)667,287 & WWE

The network generated $4.4 million in revenue off the approximately 495,000 subscribers it had at the end of the quarter.  From here on, we'll be getting network subscriber number updates quarterly, unlike how pay-per-view numbers were updated monthly.

Except for subscribers who signed up through their AppleTV boxes (they paid for their six month commitment in a single $60 shot, with 30% going to Apple), everyone had paid $10 for a single month at that point.  That averages out to $8.89 per subscriber.  Since MLB Advance Media (who developed pretty much the whole technological backbone of the network) handles payment processing for subscriptions, one would think that whatever percentage they take comes out of the $1.11 per subscriber that WWE didn't gross.

For a while now, WWE executives like CFO George Barrios have repeatedly said that there are varying splits depending on which platform a subscriber signs up on.  If someone signs up on, it's not diluted at all.  Again, if someone signs up through AppleTV, Apple gets 30%.  Barrios refused to get more specific, noting that only Apple's split is well-known.  Where this gets a little weird is that AppleTV is, as of this writing, the only device that allows you to sign up using the device maker's ecosystem.

If you're a prospective WWE Network subscriber, you can't sign up for it on a Playstation using your Playstation Network account, on an XBox using your XBox Live account, or on a Roku using your Roku account.  You need to sign up on and use your login information to sign in to your account on the device.  While it makes sense that money changes hands to get on some of these devices, it's not clear why Barrios and others in WWE act like Apple is not alone here.

By all appearances, they are alone; there's no way to denote any other subscription as unique to discovery on a specific device other than a referral URL that the subscriber doesn't have to use.  So for the time being, there's some mystery to where some of the money from each subscription is going.

It was also noted that Amazon's Fire TV will join the list of compatible devices this Summer along with the previously announced Smart TVs.  Microsoft's XBox One, which had also been targeted for "Summer," came out ahead of schedule this past week.

According to WWE's "Key Performance Indicators" presentation, pay-per-view buys for WWE's last two pre-network PPV events, this year's Royal Rumble and Elimination Chamber shows, came in at 467,000 and 183,000 respectively.  The Rumble did 512,000 buys last year with The Rock's WWE Championship win over CM Punk as the headliner, while last year's Chamber show—headlined by the rematch—did 213,000 buys.  Both shows were up from 2012 (443,000 and 178,000, respectively), albeit much more dramatically for the Rumble.

Somewhat surprisingly, one caller (remember, the callers are usually from investment firms, with the occasional outside analyst), asked how talent was going to be paid going forward.  Barrios replied they haven't commented publicly on that subject and left it at that.  It's been unclear for months how this would affect the wrestlers' PPV bonuses and it looks like there's still no answer to that question.  When Ariel Helwani interviewed CM Punk a month before launch and just a few days before he walked out, Punk remarked that “I’ll tell you when I get my pay-per-view checks because I still don’t know what’s happening with that.”

Paid attendance in North America was slightly higher than last year; both are listed at an average of 6,400 per show (out of 80 shows) but 2014 is slightly higher on the bar graph.  Since The Rock's returns the last few years spiked house show attendance even though he only worked TV and PPV, holding steady with a slight increase is very good news. There were no international shows in Q1.

Online metrics (network not included) was mixed.  Unique website visitors were up dramatically (by close to 50%) to 21.6 million, but page views were down by a little less than 10%.  Online merchandise sales were up, as well.

The next quarter is going to mean a lot. Barring further delays, we'll find out what the new TV deal is, plus we'll see how much network subscriptions grew after WrestleMania 30.  Until then, we have no idea what WWE Network's growth potential is between WrestleManias each year.

David Bixenspan is the lead writer of Figure Four Weekly. Some of his work can be seen in Fighting Spirit Magazine.