Several weeks ago, WWE announced that today would be the day that they make their initial announcement of how many subscribers WWE Network has so far. With the network being the future of the company with the possibility of it dictating the entire future of pay-per-view television, this was a huge deal.
At 8 a.m. Eastern Time this morning, WWE announced that so far, they have 667,287 subscribers, with a footnote that the "Current subscriber number does not account for potential failures to comply with subscription terms and six-month commitment."
WWE has stated in the past to sites like Motley Fool that the break-even point domestically (which is their entire potential customer base right now) is 1 million subscribers. WWE characterized the number as "well on its way to reaching its goal of 1 million subscribers by the end of 2014 just 42 days after launching in the U.S., making it the fastest-growing digital subscription service."
There are a lot of ways to look at this number. The most striking thing is that it's eerily close to last year's domestic WrestleMania pay-per-view figure of about 662,000 buys (going by F4WOnline.com's analysis of WWE's annual report for 2013, h/t WrestleView.com). WWE told the Associated Press in January that 800,000 to 1 million homes buy "an average of two to three PPVs a year," so given the pricing of the WWE Network, coming up short of the low end of that range was a little bit of a surprise.
To be clear, while WWE stock is down about 20 percent as of this writing, this number is not a failure. It's not profitable right out of the gate, but it's a pretty solid start. There are a lot of variables, and it leads to a lot of questions. It comes down to the demographics of WWE's audience and how that impacts the adoption rate.
The obvious question is if WrestleMania 30 is close to the ceiling of subscribers. Launching the network with WrestleMania 30 as the first PPV event (or "special event," as WWE is now calling them) was clearly designed to get as many people as possible to buy the network at or close to launch and never cancel. They got a pretty substantial amount of people buy in, but it wasn't quite the ideal. Why is this?
As I addressed last week, there were concerns over how WWE Network would pass its first really big test, especially in light of the high profile failures of the live streams of the True Detective season finale and the Academy Awards. WWE ended up passing with flying colors, which I expected, but when you combine the high-profile streaming issues with a general reluctance some people may have to paying for streaming media in general, that definitely could have hurt for now.
However, if people decided to wait and see how well the stream held up, those people are likely to sign up as new subscribers.
As far as the traditional PPV broadcast goes, Dave Meltzer noted late last week on his (subscribers-only) Wrestling Observer Radio podcast that, according to his sources in the cable and satellite TV industry, advance orders were well ahead of most WWE PPV events. They weren't close to past WrestleManias, but considering the level of business the rank and file PPVs do, that means that if buys continued at the same rate the show landed somewhere in in the 200,000 to 300,000 range for traditional PPV buys.
What does that mean for WWE Network? I'm honestly not sure.
According to the most recent studies from Pew Research, iHS, the NTIA and Leichtmann Research Group, somewhere in the neighborhood of 70-78 percent of U.S. households have broadband Internet. The Leichtmann study, which gives us the 78 percent figure, is noticeably higher than the others, which hover around 70-72 percent. That makes it a bit of an outlier, so let's say it's closer to 70 percent.
That doesn't tell us how many can't get broadband, though those households are forced to use satellite dishes if they want a pay TV service, and a Harris poll puts 25 percent of all homes and about 33 percent of pay TV homes as satellite customers. That makes me think that if we end up with about 200,000 domestic buys for the traditional PPV, that could be why.
Skepticism of streaming services and satellite-only fans may not be the only reason why someone would buy the regular PPV over the much less expensive WWE Network, though. It appears that the name "WWE Network" created confusion among the less-informed WWE fans. While not the only time I heard a story like this, the most visible proof was an editorial from a cable company call center employee that Jason Powell posted at ProWrestling.net.
In the month after the service was announced, they got multiple calls per day asking to subscribe to WWE Network, and the inquires weren't slowing down. In talking to co-workers, they found three common reasons as to why subscribers thought it was a cable channel like HBO or Showtime:
- When WWE Network was originally announced over two years earlier before disappearing from view, it was supposed to be a traditional cable channel, and fans remembered that.
- The cable company did carry WWE Classics on Demand, which ended during the period in question, so lots of people thought WWE Network was a direct replacement.
- The name "WWE Network" made people think of a traditional cable channel and not an Internet streaming service.
So when these fans called their cable or satellite provider to try to order WWE Network, and especially if they got the sales department like the editorial writer worked for, they were probably urged to order the traditional PPVs. That's likely regardless of whether they got a customer service representative who knew what WWE Network is. Maybe, like with the guy who wrote the article for ProWrestling.net, they might get someone who knows what it is and only tried to push a better Internet connection on them, but that's the best-case scenario.
Along those lines, WWE also didn't really do much to push the service as something to watch on your television set. Presumably because it's what the announcers can demonstrate live on Raw, the demonstrations on TV revolved around watching the service on WWE.com and in the WWE app. They have a video about using a game console or dedicated streaming device, but it's always aired as a bumper going in and out of commercials, so a lot of people probably didn't notice it as much.
If I was WWE, to resolve the confusion, I would do the following:
- Heavily push the positive media coverage of the network and the stream holding up so well.
- Stress that for less than the price of WrestleMania in HD from your cable or satellite company, you could have gotten it on WWE Network along with a ton of other content including every other WWE, ECW, and WCW PPV in the companies' histories.
- Mention other services by name as a point of comparison. They've avoided this, even pointing out WWE Network is different because of the 24/7 live stream, but it needs to change. MLB.TV is their partner's flagship service, is wildly successful, and us the closest comparison, so mention them. Talk about how it's as easy to use as Netflix. They're not direct competitors for anything other than entertainment dollars, so WWE should leverage their popularity for themselves.
- Replace the segment with the announcers showing off the network in the app and on WWE.com with Renee Young at a TV backstage and all of the major compatible devices on a table. Show her using the network on one of them (the interface is pretty much the same across all devices), pointing the remote at the TV, and other little thing you can do to get the message across that the service is designed for lean-back viewing on a TV.
- Make some kind of deal with Roku where you get a or discounted free box with a subscription of a certain length, This helps them get fans without a compatible device who don't know that the cost of entry is as low as $50, about the same as a regular monthly PPV, for their the Roku 1 box or the Roku Streaming Stick product.
It's not the absolute ideal number, but it's not even remotely a bad start at all. How WWE reacts and how that shapes the coming months is what matters. It's all uncharted water. If it grows because people see how well WrestleMania went off and WWE improves its messaging, they'll have no problems hitting 1 million subscribers by the end of the year like they forecasted.