Examining WWE Network's Future in Light of Company's Struggling Stock

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Examining WWE Network's Future in Light of Company's Struggling Stock
Credit: WWE.com
WWE Network announcement in Las Vegas

Coming out of Monday's WWE business outlook conference call for investors, the most interesting answer came from one of the few times Vince McMahon spoke up (recaps at ProWrestling.net and Wrestling Inc). 

When asked if perhaps the company should have waited on launching the network in case it had a negative effect on its TV deal negotiations, Vince answered yes.  If the WWE waited, though, it most likely would have had to hold out a whole year since its plan revolved around WrestleMania.

It's hard for me to disagree: Regardless of what reason you want to give (less uncertainty for Wall Street or Comcast—the parent company of NBC Universal—taking issue with the network and letting it color negotiations or anything else), WWE would have been best off putting some space between the network launch and TV negotiations.  

Speculation over the potential of both spiked the stock price to an all-time high, but that bubble broke the morning after the new deal with NBC Universal was announced.

Regardless, WWE doesn't have a time machine.  The company has made its bed.

WWE Network Growth So Far
Date Number 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

IndeedWrestling.BlogSpot.com & WWE

I'm probably more optimistic than most about WWE's network being able to hit its targets sooner or later.  The reason for that is I think the company's biggest hurdle in getting new subscribers has nothing to do with the content offered, the price or anything like that.

I feel that WWE's biggest hurdle in adding subscribers is fan education.

In the comments on Bleacher Report and on other sites—Twitter, Facebook, etc.—it's not at all uncommon to see WWE fans who don't have the network or refuse to get it for reasons that don't quite make sense.  Maybe they think it's a cable/satellite network not carried by their provider.  Maybe they know it's Internet-based but think they can only watch it on a computer or mobile device.

At any point since the WWE Network launched, were you ever under the mistaken impression that any of the following applied to WWE Network?

Submit Vote vote to see results

I don't know if WWE deserves blame for not hand-holding enough, but way too many people still don't know the network is a streaming service that can be watched on a TV using a number of game consoles or other streaming devices.

I was amazed at WrestleMania feedback where people would talk about ordering the traditional pay-per-view for $60-$70 because they didn't want to watch on their iPads—$70, which would have covered a Roku box with $20 left over.

It's possible that one source of confusion is that UFC Fight Pass, a similar service that launched several weeks earlier, is in fact only available on computers and mobile devices right now.  Even UFC's Marshall Zelaznik, who, as UFC's chief content officer, should know the differences, was confused when talking to Dave Meltzer at MMA Fighting a few weeks ago about if UFC's PPVs could follow in WWE's footsteps and move its own PPVs to its respective streaming service:

We're already in conversations (with pay-per-view providers as the current deals expire late this year) and we made it clear that we still are a pay-per-view company. We are not intending to do what WWE does. We like our partnership. We think pay-per-view is a sit-back experience to watch on television as opposed to a lean-in experience on a computer screen. The economics are for us in the pay-per-view world rather than the over-the-top world. Pay-per-view is a good business for us, we like it, and we don't have any intentions of putting pay-per-view on Fight Pass. Our strategy is Fight Pass is a complimentary product. That's our philosophy.

The quote also indicates that he doesn't seem to realize that UFC's own product could become available on TV-connected devices, but that's something for our friends on Bleacher Report's MMA team to cover, if they feel so inclined.

WWE is finally starting to make some strides in this direction: The video it created with Kofi Kingston is designed to make it clear that the WWE Network is a streaming service "like Netflix" and is available on a number of devices that let you watch it on your television set.  

The "It's like Netflix (for WWE), but better!" slogan amplifies that, and the network starter kits (really just Roku streaming boxes and sticks with WWE Network-specific start-up guides) WWE is selling is another good way to address the problem.

Since WWE's 2009 price increase where PPVs went up to $44.95 SD/$54.95 HD for non-WrestleMania shows, how many PPVs have you typically bought each year?

Submit Vote vote to see results

Back when the network was announced in January, WWE told the Associated Press' Dan Gelston that "about 800,000 to 1 million homes buy an average of two to three PPVs a year."  Aside from homes in rural areas that can't get broadband Internet but were ordering from satellite TV providers (a situation that "many" DirecTV customers are in, according to the CEO of new parent company AT&T during its own investors' call Monday morning, per Ben Popper of The Virge), there's no good reason why those homes aren't all WWE Network subscribers.

Depending on if WrestleMania was one of those two to three shows, if the home bought the PPVs in HD, and if the cable/satellite provider charges extra for HD, those 800,000 to 1 million households would have spent $90 to $125 for two PPVs or $135 to $180 for three PPVs last year.  

A year of WWE Network is $120, and the most inexpensive supported devices for fans who don't already have any, the Roku 1 and Roku Streaming Stick, cost $50.  The value should be obvious.

WWE also needs to focus on gamers in network promotion.  While the PlayStation 3, PlayStation 4, Xbox 360 and Xbox One consoles all support WWE Network, less console owners are aware of the non-gaming features than you'd expect.  Even if certain gamers are aware and use them to watch, say, Netflix, they may not ever check the app sections of their console's online store for new apps like WWE Network or HBO Go.  

It's entirely possible that a lot of WWE fans have supported devices and don't know it.

The aforementioned Kofi Kingston video never specifies game consoles as being supported.  The longer version on YouTube does, but it doesn't have the same potential audience as the one shown on Raw and SmackDown.  WWE really should recut it to hammer home the point about the WWE Network being available on Playstations and Xboxes.

To hit the 1 million subscriber number required to break even domestically (today's presentation indicates it may require a little bit more than that) should really not be that difficult.  WWE knows it has the fans willing to spend comparable money for considerably less content now, and since they're buying more than just WrestleMania, that figure doesn't include lapsed fans who would be interested in archival content on the network.

It's just a matter of properly contextualizing the network so the fans who don't understand it start subscribing.

 

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

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