“Let’s Get Ready To Rumble!”  

WWE (World Wrestling Entertainment) is one of the very few success stories that sport fan base can be monetized.  By charging fans to watch their favorite wrestlers either through pay-per-view or subscriptions, the company can receive steady stream of revenue from a traditionally free entertainment on TV.  Better yet, unlike most other sports, WWE has a near monopoly on the content as they own the wresters’ contracts with virtually no real competition.  It is hard not to think Netflix when look at WWE.  Netflix revolutionized and transformed the way we watch movies from going to theaters, renting video tapes from brick & mortar stores to mail-order CDs and, most recently, streaming any movies/show whenever and wherever.  Bringing actual real-time wrestling events to your fingertips, in early 2014, that WWE Network became a “Streamer.” Converting to monthly subscription fee of $9.99, the longer-term revenue is more secured and sustainable than the old model of $49 pay-per-view.

We consider this is a strategic breakthrough, since just 18 months later, more than two thirds of WWE’s Q3 2015 $166.2 million revenue, increased 57% from the year before, came from Network.  The company premiered more than 85 hours of original content on WWE Network, increased the network’s comprehensive on-demand library to over 3,700 hours, and continued to broaden its global distribution into more than 175 countries.  From inception through September 30, 2015, WWE Network attracted nearly 2.3 million unique subscribers.  WWE Network had approximately 0.243M international subscribers.   And, the bloodline of the company, or the subscriber base, has reached to 1.233 million, 62% higher than a year ago.

“And That’s The Bottom Line!” (‘Stone Cold’ Steve Austin) 

While the revenue stream of a subscription-based model is more secured than pay-per-view model, WWE also joined the long line of media companies, such as Netflix, Hulu, ESPN, who live or die for meeting the shareholders’ expectation on the monthly numbers of subscribers. In early 2014, WWE shares have jumped more than 200% due to the launch of the subscription Network, but quickly gave it all back for the sluggish initial subscriber growth.  For the better part of 2015 when the rest of the media firms were struggling for fast changing technology, WWE stock went up an impressive 40% due to the 79% increase in subscribers.  Shares were sold off again, albeit a strong Q3 2015, due to its lagging subscribers from Q2.

Fan loyalty, and thus, “perceived” quality content is the hidden asset for WWE.  While the bloodline is its subscribers, the lifeblood of WWE subscribers is still its content. The more quality content WWE can put on the Network, the stickier the Network will be, especially for more casual fans.  When you ask fans why they watch WWE versus TNA, they’ll say, “Because John Cena is better than Bobby Lashley, Roman Reigns sicker than Kenny King, Sheamus bigger than Austin Aries, Charlotte Havok meaner than Steve Austin, and EC3 over Undertaker any day.”  Subscribers follow their favorite wrestlers.

“Everybody’s Got A Price!” (Ted DiBiase)

Wrestlers will move to wherever to get larger contracts or a more exposure at the risk of contract disputes.   Because you will still watch “the Rock” after he returned from Hollywood, even with a disappointing rating last quarter, WWE did not lose their subscribers.

The challenges still remain, though, that WWE’s mobile and social reach is still staggering.  As video has been at the center, in just Q3 2015, official WWE content had nearly 1.5 billion worldwide views, per Tubular Labs.  While mobile video content serving to the purpose of promote and strengthen younger fans’ engagement with content, monetization has been limited.  On the heels of WWE’s participation in the Facebook Partner Program, Twitter’s open Amplify, and YouTube’s Red, we expect the monetization to improve. Further, just like Netflix’s dominance in usage over Amazon Prime has been its relatively superior user experience, and the poor apps like OTT and TV Everywhere, a great WWE user app experience is paramount.

Like Facebook finally making meaningful advertising revenue, and Netflix’s new lifeline original content, “House of Cards,” WWE should learn quickly how to capitalize the unique big data goldmine they are sitting on to design “The Best There is” (Bret Hart) wrestling products.

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