Breaking Down What WWE Must Do to Improve WWE Network Adoption Rates

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Breaking Down What WWE Must Do to Improve WWE Network Adoption Rates
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WWE Chairman Vince McMahon unveils WWE's new corporate logo at WWE Headquarters in Stamford, Connecticut.

My previous article provided an overview of the strategy which WWE has adopted in their pursuit of more subscribers for the WWE Network.

The five-prong strategy (new content, new geographies, new distribution platforms, new features, marketing campaign) makes sense, but it's not enough. There’s still much more that could be done to improve WWE Network adoption rates.

 

Business analysis

When a businesses are concerned with the profitability of a product, they have many options on how to address the situation. They can raise the product's price. They can work on lowering cost of goods for the product. They can target increasing distribution of the product to stimulate demand and awareness. They can increase demand for the product through promotions (which often include price reductions) or by including attractive added benefits.

WWE doesn't have all of these options on the table.

The price for the WWE Network is locked down. The over-the-top WWE Network costs $9.99 per month for a six-month commitment. That seems unlikely to waiver anytime soon.

The "cost of goods" is already being trimmed. WWE is engaged in a series of cost-cutting measures which has included staff cuts and division trimming (it's bittersweet to see the WWE Magazine division go away).

In terms of distribution, WWE has rolled out the WWE Network to an increasing bevy of devices. However, there is more they could do about releasing the WWE Network in several countries where it remains unavailable. The list includes the U.K. (coming in October), China, Japan, Italy, Germany, India, several countries in the Middle East and North Africa, the Philippines, Malaysia and Thailand. Additionally, availability in Canada is limited (estimated at about 20 percent of the country, per StormWrestling.com).

When it comes to the WWE Network, it appears that the company misjudged the initial demand for the domestic over-the-top product (for more on that, see the "Fumbles on the initial projections" section of my original article). Promotional pushes such as the free-week "no credit card required" trials and "tell-a-friend" campaigns did not result in massive increases in the total number of subscribers. 

WWE makes an enormous amount of annual revenue from their lucrative television rights. Currently, the companies that pay these rights, such as NBC Universal, retain the rebroadcast rights for Raw and SmackDown for 30 daysUnfortunately, unless WWE was able to change this in their latest deal (of which Vince McMahon publicly said he was "a little disappointed"), this is unlikely to change anytime soon.

At this point, to grow the WWE Network subscriber ranks, there's two major options left on the table: WWE can move ahead on targeting specific groups or it can continue to tout the attractive added benefits of being a WWE Network subscriber.

 

Connecting content and popular stars 

In the September 1, 2014 issue of the Wrestling Observer Newsletter (subscription required), editor Dave Meltzer notes the most popular male and female wrestlers according to "Google metrics."

For the men, it was Dwayne "The Rock" Johnson (off doing movies), John Cena, C.M. Punk (left the WWE in January), The Undertaker, Hulk Hogan, Dave "Batista" Bautista (part-time between wrestling and movies), Brock Lesnar, Triple H, Daniel Bryan (currently recovering from injury), "Stone Cold" Steve Austin (retired wrestler, now a podcast star), Sting, Randy Orton, Roman Reigns, The Big Show, Ric Flair (retired wrestler), Bray Wyatt, Jeff Hardy (TNA), Dean Ambrose, Rey Mysterio (alleged contract dispute with WWE), Shawn Michaels (retired wrestler), Vince McMahon, Chris Jericho, Seth Rollins, Sheamus, The Miz, Sin Cara, Rusev, Rob Van Dam, Kurt Angle (TNA), Dolph Ziggler and Goldust. Among the women the top list included AJ Lee, the Bella Twins, Stephanie McMahon, Eva Marie, Paige and Natalya.

These sorts of metrics are useful for understanding who WWE may want to include in supplemental content.

For instance, should WWE consider putting together a new season of Legends House, retired legends such as Hogan, Flair and Sting would obviously be excellent candidates. There's also clearly a connection with putting already aired Total Divas footage on the WWE Network; it's clear the show has contributed to the popularity of divas Eva Marie, Natalya and the Bella Twins.

This also suggests that many active wrestlersparticularly rising stars such as Roman Reigns, Bray Wyatt, Dean Ambrose, Seth Rollinscould be playing a larger role on the WWE Network. They don't need to "star" in a show to be featured. 

WWE could utilize older footage and append new commentary from stars. I believe there's a rich opportunity when you tie the wrestlers of today with footage of yesteryear. WWE could have Dolph Ziggler introduce a favorite WCW Clash of Champions or Sheamus select a hard-hitting episode of Extreme Championship Wrestling. It's a minimal amount of work to both highlight current wrestlers and connect their vast library to modern fans.

Still, it's important to note that with WWE in cost-cutting mode, producing new television programs (i.e. Tough Enough, Legends House, Total Divas) is quite expensive. 

Meltzer reported in the latest Wrestling Observer (subscription required) that a new season of Tough Enough, which was set to be filmed at NXT, may already be completely cancelled as a "victim of budget cuts." In the November 6, 2013 issue (subscription required), Meltzer noted that the per-episode production cost for Total Divas was estimated at $400,000. Spending that much only makes sense when WWE is receiving millions in TV rights from E!. For WWE Network-only content the budget is a lot more restrictive. 

Still, there's popular wrestlers like Lee who aren't being featured on Total Divas. The WWE Network can be both an avenue for reusing already aired footage but also keeping things connected to the modern product.  

 

Commitment

WWE needs to figure out the “commitment” element of their subscription package.

Currently, an over-the-top subscription to the WWE Network costs $9.99 per month with a six-month commitment. But what does that commitment really mean?

Second-quarter financial results told us that 128,000 subscribers cancelled their subscriptions between April and June. During the conference call, executives suggested that the drop was due to the “payment billing driven element of churn.” It’s a playful euphemism. However, the reality is that a significant portion of WWE Network subscribers (more than one in seven) were either successful in “gaming the system” or financially insolvent. Both scenarios are alarming for the WWE.

Instead, it’s in WWE’s interest to truly entice people to start a subscription commitment and maintain it through each renewal period. If they can’t do that, there should not be a commitment.

There’s even anecdotal stories that some users have cancelled their subscription and yet are still able to access WWE Network content. Others have relayed how they were able to terminate their subscription prematurely simply through calling customer service or de-authorizing recurring payments.

This is a huge deal because it reaffirms how important retaining subscribers is to the well-being of the WWE. Back in 2003, Netflix noted in their annual report that "Approximately 90 percent of trial subscribers become paying subscribers." If you treat the first month of the subscription as a trial, WWE needs to be doing a better job of converting "trials" into "paying subscribers."

Currently, the “no-commitment” tier for WWE is $12.99 per month, which is a 30 percent premium to the normal price. Is that enough difference? Originally, WWE announced the “no-commitment” tier would be $19.99 per month, but the company abruptly changed course on the August 12 launch day, citing a "variety of economies that exist internationally."

Other over-the-top subscription services such as Netflix or Hulu Plus don't give options around auto-renewal. They just default to doing renewals each month. It's time for WWE to adopt their model and force auto-renewal on their customers. 

WWE decided to launch at $9.99. Last year, WWE had pegged the price for a "potential WWE Network" at between "$12.99 and $14.99." Instead, WWE ended up announcing the launch price at $9.99 in January 2014. WWE always had the option of lowering the price over time, but raising it is tough.

Now, they're locked into the $9.99 price point, and it's clear that their benchmark as a global strategy is in U.S. dollars.

 

Key executive positions

There's an exceptionally important behind-the-scenes change that needs to be made: WWE needs dedicated leadership for the WWE Network.

Currently, there's an enormous hole in key executive-level positions in the WWE. The Executive Vice President (EVP) of Programming and Executive Vice President (EVP) of Digital Media positions are currently vacant. However, back when the WWE Network originally launched, both of these positions were filled.

In November 2013, Matthew Singerman was hired as the EVP of Programming. Essentially, he was brought on board as the head of the WWE Network.

As Singerman's Linkedin.com profile notes, he was responsible for "all aspects of putting the network together including the marketing, publicity, sales, programming and scheduling." Still, he didn't last long. It was reported in the Wrestling Observer in May 2014 by Dave Meltzer (subscription required) that Singerman was allegedly released as the "first scapegoat for the network performing below expectations."

Meanwhile, Perkins Miller was appointed as the EVP of Digital Media in August 2012. Some may recall him clowning around with D-generation X during the WWE Network launch announcement. However, Miller left the WWE in April 2014 to join the NFL as their new chief digital officer. 

As summarized for talentleague.com, while Perkins Miller worked for WWE he was responsible for "the strategy, planning and operations of WWE's digital and social businesses on a global basis, including media rights, programming, product development, business operations and media strategy." That's a lot of responsibility, and it's not clear who is steering the ship now.

Considering how important the WWE Network is to the success of the WWE, it seems mind-boggling that WWE doesn't have more executives dedicated to the success of their global over-the-top service. Instead, WWE is in a cost-cutting mode.

Yet now it's more important than ever to have people who are dedicated 24/7 to the marketing, programming, sales and direction of the WWE Network.

Perhaps Singerman's background in traditional television (TV Guide, Fox News, Reelz) wasn't ideal for launching a service that is primarily distributed as an over-the-top network. However, that doesn't excuse the WWE from hiring someone else with a stronger background.

There's plenty of other firms that would have a knowledge base and experience perfect for the WWE Network, including Hulu, Amazon Prime, Netflix, MLB Advanced Media, UFC Fight Pass, AppleTV and Roku.

 

Account sharing

WWE needs to start cracking down on the number of simultaneous users accessing the WWE Network. While a draconian one login/one device approach would be too strict, it's very possible to establish a reasonable limit to end any rampant account-sharing. 

The WWE Network ought to look at Netflix. That company offers a variety of tiered plans based on the number of simultaenous devices that are going to access the plan. For instance, they offer one screen in SD, two screens in HD or four screens in HD for different prices.

At the last conference call, WWE executives noted that "91 percent of subscribers access the network at least once per week and use 2.5 devices to access the network content." The key is recognizing that it's important to limit the number of concurrent users on the same login more than the total number of devices that can accessing WWE content.

It's logical to accept that one subscription may access WWE content in several places (WWE does promote a second-screen experience during pay-per-views, for instance). Still, WWE needs to establish a logical baseline.

 

Attitude Era footage

Currently the WWE has the complete library of WWE, WCW and ECW pay-per-views available for streaming. However, what's missing is the "build" to each show from the weekly television programs. There isn't a complete archive of WWF's Monday Night Raw or WCW's Monday Nitro.

While the entire library at a subscriber's fingertips may remain aspirational for some time, it's important that the WWE prioritizes the shows which have the greatest potential appeal to current and potential WWE Network subscribers. Principally, that means adding the Attitude Era footage (1997-2001) including WWF Raw, WWF SmackDown, WCW Nitro and WCW Thunder.

Chief Financial Officer George Barrios indicated at the recent fireside chat that WWE wanted to cross-promote new content being added to the library. For instance, bringing online episodes from the first year of WCW Monday Nitro would correspond with the release of the new Monday Night War documentary series on the WWE Network. While that makes sense, WWE needs to either speed up this process or explain it clearly to their subscribers.

Principally, WWE needs to keep rolling out new reams of footage each month. The company also needs to do a better job communicating to their fans (and potential subscribers) what is coming online and when it will be available. 

While marketing and building excitement is important, WWE should recognize that the appeal of an over-the-top streaming service is creating excitement around the content that is available and keeping consumers hooked for months to come.

It's especially important that WWE recognizes the trend of "binge-watching" on over-the-top services. Nielsen reported that "88 percent of Netflix users and 70 percent of Hulu Plus users report streaming three or more episodes of the same TV show in one day." WWE network subscribers are not going to be content with single episodes of television shows (such as WCW Monday Nitro) being rolled out each week. Instead, they want entire seasons. 

 

Monetize important events 

Obviously, it's in WWE's interest to make every pay-per-view a "must see" event. That's been its goal for years. However, there's also the reality that only a small handful of eventsSummerSlam, Royal Rumble and WrestleManiahave garnered name recognition as major milestones. These events garner casual fan attention each year.

Therefore, these are especially important shows for the WWE Network. These events are clearly worth more than the B-shows. Yet the current WWE Network plans (a six-month subscription is just $9.99 per month) prices them all the same.

Moreover, the "no commitment" subscription is set at $12.99 per month. It would make much better business sense for WWE to charge a premium during special events. During January to April, WWE should raise the no-commitment price.

 

Micro-targeting

In the past, there was a barrier between the WWE and WWE fans. Nielsen could provide ratings and tell the WWE how many people were watching their shows domestically but could not necessarily identify the specific households. Likewise, pay-per-view providers zealously guarded their subscription data. This limited WWE's ability to even know which PPV buys came from hardcore fans and which came from casual fans.

Now, the WWE Network provides the WWE the opportunity to interact directly with subscribers. WWE knows who is subscribing to the WWE Network, what those customers are watching, what products they are buying on WWEShop and so much more.

It's time for WWE to harvest this information.

With an over-the-top network, there is a huge opportunity to interlink content. WWE could better utilize playlists built around a certain superstar or gimmick based on a subscriber's viewing behavior. WWE needs to expand their social media sharing integration with the WWE Network platform.

WWE also needs to recognize opportunities for selling relevant merchandise and advertising directly to targeted consumers. Imagine watching a Paige match on Main Event and on the side of the screen there is an option to put her T-shirt in your WWEShop basket. 

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Paige: Think Again

The demographic and spending information that WWE has already collected could be a huge selling point for WWE to potential advertisers. 

This could allow for more in-app purchases. What if WWE began offering access to the latest Home Entertainment titles? A subscriber could watch Ladies and Gentlemen, My Name Is Paul Heyman for a nominal fee. Or WWE could let users purchase an entire "season" of Georgia Championship Wrestling.

These sort of solutions provide a way for WWE to monetize their existing user base without being forced to raise monthly subscription prices.

WWE has the ability to survey subscribers about what they're most interested in watching in the future. They can harness this information to direct where they should be focused for new content roll-outs. Obviously, the surveys also need to be targeted toward potential subscribers so the company can better understand how to hook these fans.

Additionally, it should be doing more to connect up with fans at live events. There should be a WWE Network kiosk where someone will sign you up. It could have lower-card talent give out autographs or taking pictures with people who sign up. 

 

WWE Network live stream

A serious element which the WWE needs to address is the "live stream" on the WWE Network. WWE needs to clearly explain what purpose that the "live stream" serves in an on-demand, over-the-top environment.

When there is a special event such as a pay-per-view or live NXT show, the live stream on the WWE Network makes a lot of sense. The question is what they should do with the live stream during the rest of the month. 

Originally, the WWE envisioned launching a traditional television network. In 2010 Vince McMahon commented that the WWE was "doing a great deal of due diligence" on a possible cable network. The live stream makes more sense in this context.

Now, the live stream seems like an anachronism. It makes more sense in a country such as Canada, where the WWE Network is distributed through a cable network. 

Optimally, WWE should be gathering key insights on how, when and why its subscribers are watching the 24/7 programmed live stream. Does it make sense to develop time slots and play certain programming at certain times? Also, what sort of unique opportunities does the live stream offer?

WWE could be creating time slots where certain programming always aired. For years fans were trained to tune into "6:05 on the SuperStation" to watch wrestling on Saturday nights. It would make sense to program blocks of footage on the live stream playing off themes such as this.

There's an opportunity for WWE to develop programming such as live programming include weekday interactive shows (some believe that cost-cutting and McMahon's iron fist regarding content control may prohibit this sort of programming). Still, commercials, advertisements and cross-promotion are more natural when you're watching live streaming programming.

It's imperative that WWE best understands how different age groups interact with WWE Network content. An older generation of fans, particularly the 35 percent of their viewing audience over the age of 50, are more likely to be comfortable with consuming WWE content more as a programmed television channel than as an on-demand service. 

Perhaps WWE does need to relent and offer the WWE Network as a premium channel through cable or satellite means. Some WWE fans live in areas where they can get satellite television but not broadband and thus are unable to order pay-per-views. WWE should not give up on the over-the-top service, but it might have to accept that to grow the domestic base of subscribers, it needs to adopt more traditional technology to reach older fans.

The lukewarm reaction to the Canadian roll-out of the WWE Network (Rogers' WWE Net Pak) contrasts with the reported success of the service. It's quite possible this is evidence that many fans are more comfortable with the idea of subscribing to a premium channel (like HBO) with supplemental on-demand content (like HBO GO) rather than just adopting an over-the-top service.

 

Conclusion

When you’re looking at the WWE Network, there are many avenues for success.

WWE will need to attract more subscribers by adding attractive features (such as Attitude Era footage). WWE should be raising the "no commitment" tier price for their premium events (such as Royal Rumble and WrestleMania). And WWE should continue to understand what its offering (what's the purpose of the live stream?) and how it can reach more consumers (finish the international roll-out).

At the announcement of the WWE Network at CES 2014 in January, WWE Chief Revenue & Marketing Officer Michelle Wilson said, “We have the content and we have the fanbase willing to pay for it and build it.”

Michelle is right: It's not about the price. It's about the content and distribution. WWE needs to focus on those things if the company wants to improve WWE Network adoption rates among its audience.

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