Breaking Down WWE's Hard Sell of $9.99 Price Point for WWE Network

Chris Harrington@mookieghanaFeatured ColumnistAugust 18, 2014

WWE Network Logo
WWE Network LogoUncredited/Associated Press

On August 15, Vince McMahon unveiled the new official WWE logo.

It’s a familiar design. Originally it was prominently featured at January’s CES Press Conference announcing the WWE Network. The logo was designed for the company's new over-the-top subscription service.

As Marc Graser of Variety noted, “WWE hadn’t initially planned on having the WWE Network logo represent the entire company”. However, according to Chief Brand Officer Stephanie McMahon, “it represented everything we wanted to say to the marketplace.”

A tweet from Vince McMahon included a flag of the new logo being raised over WWE headquarters in Stamford, Connecticut. There was a second flag on the pole. This flag advertised (what else?) the $9.99 price for the WWE Network.

Vince McMahon unveils new WWE Logo and $9.99 flag at Stamford HQ
Vince McMahon unveils new WWE Logo and $9.99 flag at Stamford HQ@VinceMcMahon Twitter

After this week’s official global launch of the WWE Network in 170 countries and territories and the juggernaut SummerSlam attraction, WWE has been relentlessly shilling the $9.99 monthly cost for the WWE Network. They mention it on Raw. They mention it on SmackDown. Announcers joked about it during the SummerSlam broadcast.

Currently, the sole outlier is Canada. In that country, Rogers Media cable subscribers can access the $11.99 per monthWWE Net Pak” service through their cable subscription. The "WWE Net Pak" subscription service is offered by Rogers Communications as part of their recently announced landmark 10-year television agreement with WWE. Presumably, the month-to-month price for this service contributed to the decision to price it above the $9.99 threshold.

Otherwise, in countries where the WWE has launched their over-the-top (OTT) service, the prominent selling point has been the single price-point for a six-month commitment.

Using the same price worldwide is a bold choice. It’s part of the advertising strategy that WWE Chief Strategy and Financial Officer George Barrios laid out at the Needham & Company fireside chat on August 5. As I wrote in my recap of the webcast, Barrios noted that the WWE is "going to be using $9.99 everywhere" and that WWE was not "planning on charging more in other countries.”

A reason given for this approach was offered at the Needham conference. Barrios said that the WWE was going to buy a lot of “Search Engine Marketing” (SEM) and “Search Engine Optimization” (SEO) so the company could create “global awareness” for the WWE Network. Certainly using a single price point does provide for more cohesive promotions that won’t need to be customized by country.

On the flip-side, WWE is being locked in to the $9.99 price worldwide. Success requires WWE generate sufficient revenue to break even on the project. With the price per subscriber being set at $9.99, the company only has two remaining levers. WWE either needs to attract enough subscribers to break even on the project or find a way to lower the costs of running the network.

As the WWE expands the global audience able the access the OTT WWE Network, WWE is also continuing to pursue cost-cutting initiatives such as shutting down the WWE Magazine division.

The more the company ingrains the $9.99 price-point, the harder it will be to move away in the future.

WWE is performing a delicate balancing act.

Interestingly, WWE did announce they were offering one alternative WWE Network pricing tier. 

There is now a single month, no-commitment tier at $12.99 per month. Essentially, this is the new price for WWE fans who only want to order a specific live pay-per-view (or just want one month's access to the WWE Network library).

Remarkably, the no-commitment tier is a 35 percent price drop from the originally announced price of $19.99. As WWE noted in last Tuesday's press release, this price change "better reflects the variety of economies that exist internationally. 

Dropping the price of the no-commitment tier before it was even launched was a surprisingly quick about-face for the company. It's clear that the company is anxious to grow their WWE Network subscriber rolls quickly, and the new lowered price is their attempt to lure in some fans who may be wary of signing up for a six-month commitment. However, with only a three-dollar difference between price points, WWE may find that subscribers begin just cherry-picking the biggest events (Royal Rumble, WrestleMania, SummerSlam). 

The rapid and widespread roll-out of the WWE Network in August is likely a reaction to last quarter's revelation that 128,000 subscribers had already prematurely ended their WWE Network subscriptions before the expected six-month term due to reoccurring payment issues.

In WWE's original WWE Network presentation from January of 2014, WWE laid out plans to launch the WWE Network internationally in just a handful of countries (the UK, Canada, Australia, New Zealand, Singapore, Hong Kong and the Nordics) by "end of 2014/early 2015."  Instead, the WWE moved ahead with what I termed "an ambitious global launch" on August 12.

Globally, the WWE Network is now available "in more than 170 countries and territories." They sped up the timetable and broadened the scope.

Yet, according to Reynard Odenheimer of PWInsider.com, there's still many large worldwide markets where the WWE Network is not yet available. They include:

  • China
  • Japan
  • Germany, Austria, Switzerland, Liechtenstein
  • Italy, San Marino, Vatican City
  • Egypt, Algeria, Morocco, Tunisia
  • India, Pakistan, Bangladesh, Afghanistan, Nepal, Sri Lanka, Bhutan, Maldives
  • Iraq, Saudi Arabia, Yemen, Jordan, Lebanon, United Arab Emirates, Palestine, Oman, Kuwait, Qatar, Bahrain
  • Philippines, Thailand, Malaysia
  • United Kingdom, Ireland, Jersey, Island of Man, Guernsey and Alderney

We do know that the next big marketplace announced to receive the WWE Network will be the United Kingdom group. WWE has promised that the WWE Network will be available in those countries by October of 2014. 

Analyzing the list of countries where the WWE Network is not yet available reveals that many of these countries have recently negotiated content deals. Most of these deals have been announced in the past year.

This would include Thailand (CTH, January 2014), United Kingdom (BSkyB, January 2014), Germany (ProSiebenSat.1, March 2014) and Middle East and North Africa (OSN, July 2014). In addition, it's also possible that earlier deals such as Japan's five-year agreement (J SPORTS Broadcasting Corporation, February 2011) are affecting the ability to launch the WWE Network in that country.

WWE Superstar Kane visits India
WWE Superstar Kane visits IndiaWWE.com

WWE has still not yet announced their new TV rights deal for India. It's something that investors have brought up several times. Most recently WWE was asked about it during the second-quarter conference call. CFO George Barrios said the WWE was "still working through the deal with our partner."

Right now, it seems unlikely WWE will announce their strategy for distributing the WWE Network in India until the television deal is signed and announced. In fact, it's quite possible that releasing the WWE Network in many of these countries is directly connected with these new content agreements.

The Rogers deal in Canada proves that WWE isn't simply taking a one-size-fits-all approach when it comes to the WWE. 

In the case of the United Kingdom, while WWE has announced a launch date (October 1), it has not yet specified whether or not UK fans will receive the over-the-top version of the WWE Network service.

WhatCulture.com has speculated that WWE may actually require a Sky Satellite TV subscription in order to access the WWE Network. Since WWE has sold their pay-per-view rebroadcast rights to Sky in the UK, this approach would make sense. However, all of this is just conjecture that has yet to be confirmed or denied by the WWE.

With more than 1.3 billion people living in China and more than 1.2 billion people living in India, WWE is very anxious to grow in these enormous markets. Indeed, in WWE's June 2014 investor presentation, the company notes that their four key markets include the United States, the UK, China and India.

It's very telling that in WWE has not yet rolled out the WWE Network in three of their key markets. I wouldn't classify it as a lack of interest on WWE's part. Instead, the delay is more likely the result of a complex business calculus around the state of their television rights and PPV rebroadcast agreements.

With the WWE Network, the WWE is taking a lot of money out of the pockets of companies which were going to distribute future WWE pay-per-views. Therefore, it's very possible that they need to come to a new agreement, perhaps with revenue-sharing elements, that will compensate these media partners.

Meanwhile, the first big WWE Network renewal rush hitting this week. It's what I have termed the " six-month renewal cliff." Starting on Sunday, the first batch of subscribers will see their initial six-month subscription commitment expire. First-day adopters must decide whether or not to stick with the WWE Network service (only $9.99! $9.99! $9.99!) by Sunday, August 24.

Investors have asked WWE during their conference calls to provide guidance for what percentage of their current subscribers the company expects will renew their six-month subscriptions. WWE has repeatedly declined to provide those internal estimations.

By launching the WWE Network globally this month, the company is likely hoping that potential domestic service subscription declines will be offset with new international growth. Still, until the WWE explains what they're doing in several of their biggest markets (such as the UK, Germany and India), it remains exceptionally difficult for anyone to predict year-end worldwide subscription numbers.

Hulk Hogan's birthday cake with $9.99 decorations
Hulk Hogan's birthday cake with $9.99 decorationswwe.com

All we know so far is that should the WWE Network be distributed as an over-the-top service in these new markets, the price will be $9.99 contingent on a six-month commitment. And we can all expect to hear that price point ($9.99) hammered every single Monday night for the foreseeable future.


The latest in the sports world, emailed daily.