Will the WWE Network fail?

[SoulTrain4]

Although it's doing okay and Wrestlemania inticed 600,000 people to sign up there are still questions about the long term issue of the network.

Here are a few:
- it's killed the PPV business for them
- it's killed their DVD distribution
- there is always the option of people not renewing their subscription after the initial 6 month sign up
- eventually they will have to increase price on the network (to what I don't know but it won't stay 9.99 forever)
- eventually they will have to set up special packages for their events (they can't continue giving away PPVs basically for free)
- like Netflix and things of the same nature it's open to bootlegging (people giving away their password to their friends)
- there are still some struggles with lag and freezing due to their inexperience of running such a project

But there is some upside...
- WWE has a massive library and most of it isn't even on the network yet
- The Network isn't available outside the United States, when it hits the world it could be a huge success.
- The exclusive content seems to be quite popular.
- Older fans seem to be addicted to it.
- The technical issues will be cleared up over time as they get better at maintaining it.

So shake up your crystal ball and look into the year 2020 do you still see the Network around then or is it going the way of the XFL and many other McMahon ventures?

 

[JustZackster]

I don't think the WWE Network itself will fail, but it will certainly cause lower revenue for the business as a whole. It was pretty obvious from the get go. Sure, in the first few months you have 600,000 people sign up for the Network. That's 600k people getting 6 months of PPVs for $9. So for a single person, it'll take about 2.5 years of the Network to add up to a single PPV's worth. Multiply that by 600k, and you get 1.5 million years before the Network pays the same amount as everyone purchasing one PPV. Someone can check the math, but I'm pretty sure those are the numbers. So obviously most fans would rather pay $10 and get 6 months of PPVs, exclusive content, DVDs, and the much of the WWE library. So Vince is losing tons of money there.

But my answer, plain and simple, is yes the Network will last a while IMHO. But it won't make the business fail either. I assume we'll get a good estimate of those who are probably going to keep the Network after the first 6 month period is up, and that'll infer how many people will continue to purchase it. Also, they will still make a killing in ticket sales. People still want to watch it live. Similar to the NFL when fans see an entire season for free on TV but pay tons of money to watch the Superbowl in person. Also merchandise is unaffected by the Network outside of DVD sales, which will have eventually died out anyway.

I see WWE bringing in less revenue overall, even after inflation of Network costs, and them being worried about it at first, but still bringing in enough to make the Network and the entire business work.

 

[Septumus]

. Sure, in the first few months you have 600,000 people sign up for the Network. That's 600k people getting 6 months of PPVs for $9. So for a single person, it'll take about 2.5 years of the Network to add up to a single PPV's worth. Multiply that by 600k, and you get 1.5 million years before the Network pays the same amount as everyone purchasing one PPV.

That is some horrendous math. 10$ a month, PPV at 45 or 55$ for HD. So, 4.5/5.5 months to pay for the one PPV. Now at 1 million subscribers they will be on average 5 times above the buy rates of most of the shows. At 1 million they make the same cash and once it goes International, it will hit that 1 million mark I am quite certain.

 

[laodaron]

Here's the thing, the future is in Programming over IP. The days of cable providers, satellite providers, and regular content providers are waning. The WWE Network will be at $9.99 for some years, because that's all that it needs to be at. Netflix is at $8.99 ($7.99 if you're an older customer for the next 2 years). Hulu+ is at $8.99. Amazon Prime is at $8.25 a month ($99÷12). The WWE Network is $9.99 a month. It's perfectly in line with the market. The problem is that people are too worried about it failing to realize how incredible it is. With some new original programming, and once they can start uploading more shows, the Network is possibly one of the more revolutionary programming delivery models in existence.

Never worry. VKM knows what he's doing. He's a shrewd businessman, and he's always been willing to lose cash to make cash. The Network will succeed, and the WWE is going to sit on top of the Sports Entertainment world for a long time.

 

[jrjolley]

Here's the thing, the future is in Programming over IP. The days of cable providers, satellite providers, and regular content providers are waning. The WWE Network will be at $9.99 for some years, because that's all that it needs to be at. Netflix is at $8.99 ($7.99 if you're an older customer for the next 2 years). Hulu+ is at $8.99. Amazon Prime is at $8.25 a month ($99÷12). The WWE Network is $9.99 a month. It's perfectly in line with the market. The problem is that people are too worried about it failing to realize how incredible it is. With some new original programming, and once they can start uploading more shows, the Network is possibly one of the more revolutionary programming delivery models in existence.

Never worry. VKM knows what he's doing. He's a shrewd businessman, and he's always been willing to lose cash to make cash. The Network will succeed, and the WWE is going to sit on top of the Sports Entertainment world for a long time.

I'm not really so sure. Netflix subscribers come and go, they don't stick around for a full year of it because the content on Netflix vanishes as and when the provider feels like taking it off. I think the network will succeed for true fans, not the casuals. WWE is being beaten by other sports and indeed other wrestling promotions overseas, TNA being one such example. It'll be interesting to see how the subs match up when the 6 months are up for US subscribers. It's one thing having PPV's on the cheap, but if those PPVs are just glorified raws then who cares. Content matters and the WWE likes to live on it's older library, often to the detriment of anything else. Just think of how many legends they bring back at every opportunity.

 

[Nada]

The problem with many of the upsides is that they have a time stamp on them in regards to their relevancy. There will be a significant drop off come September, the Network wont be new anymore, the sights and sounds of Wrestlemania wont be present come September, and the allure of old content will be less as people will consume what they want, which leaves the Network where exactly?

There is also the very real chance that WWE will hike up the price, to make up for the disappointing amount of subscribers.

The same arguments used for the Network being this huge thing that was easily going to break 1-1,2 million on day 1, is used now for it to see this immense growth. I am not seeing it, its all front loaded.

There is a reason why they fired the person who was in charge of the WWE Network, they were led astray into believing their own fantasy world numbers and expectations.

WWE Network is not meant for casuals, because casuals cannot even handle 3 hours of Raw programming before viewership starts to drop off, they could not handle 3 hour Nitro's either. What makes anyone think they want EXTRA content that they pay for? Why do you think Smackdown and Thunder could never replicate the ratings of the A show's? Because the majority of people who watch can only take so much content before they are finished and ready to flip the channel.

 

[laodaron]

I'm not really so sure. Netflix subscribers come and go, they don't stick around for a full year of it because the content on Netflix vanishes as and when the provider feels like taking it off. I think the network will succeed for true fans, not the casuals. WWE is being beaten by other sports and indeed other wrestling promotions overseas, TNA being one such example. It'll be interesting to see how the subs match up when the 6 months are up for US subscribers. It's one thing having PPV's on the cheap, but if those PPVs are just glorified raws then who cares. Content matters and the WWE likes to live on it's older library, often to the detriment of anything else. Just think of how many legends they bring back at every opportunity.

LOL, what? Netflix is generally lauded in the entertainment community as having the incredible retention.

The WWE Network isn't designed for hardcore fans, it's designed for the casuals. The WWE isn't being beaten in any market anywhere EXCEPT maybe Japan by Japanese federations.

And finishing your reply, it's obvious you aren't watching the current WWE product, because this is the best it has been in well over 10 years.

 

[Jack-Hammer]

I honestly don't believe it'll fail. When I was reading over WWE's financial report for the first quarter of 2014, it seemed to be pretty clear that the company expects to take a financial shortfall in the short term. I'm hardly some sort of financial expert, so I'm just going by what I read. However, Iv'e read various reports on WWE's finances that suggest the same thing. The WWE Network is something that the company and the report of every financial analyst I've read in regards to the network itself expects to pay off in the long run. For instance, WWE stock was about $30+ per share a month ago and while it's dropped dramatically, I read a report by an analyst working for Forbes stating that the stock would most likely return to that level by the end of the year. Another article I read at PWTorch.com earlier this week states that expectations for the WWE Network are high among investors and analysts. The report mentions that the company did well in excess of $500 in revenue in 2013 and that it's expected that the WWE Network will increase that revenue to over $800 million by the end of next year

When the numbers for the WWE Network were announced, I was genuinely surprised that the stock dropped. Again, I'm not financial expert so it's extremely possible that there's quite a bit of fine details that I don't know about that scared investors. As a layman, I thought the network having fairly close to 700,000 subscribers less than 6 weeks after its launch was pretty damn good. Last week, I read a report stating that on April 1, there were 495,000 subscribers to the network. By the time WrestleMania XXX aired, the number increased to the 667,000+ that the company announced the next day. I'll be surprised if the number isn't somewhere around 800,000 or more at this time. I've also read that one reason why WWE is having Brock Lesnar compete in a two program feud beginning at SummerSlam and running through Night of Champions is because WWE wants to load up the NOC ppv. By the time NOC is set to air, a good number of subscriptions for the WWE Network will be expiring and they're going to want to do everything they can to keep as many of those subscribers as they can as well as add new ones.

There's still a whole lot of time left in 2014, the year's not even half over yet. If the WWE Network hasn't reached the goal of 1 million subscribers domestically by the time the year's up, then I think that will be the time for people to be concerned.

 

[ITBITW]

And finishing your reply, it's obvious you aren't watching the current WWE product, because this is the best it has been in well over 10 years.

The Shield vs Evolution, and John Cena vs Bray Wyatt are a step up in the product from 2013, but you are saying these two feuds are better than the entire Ruthless Aggression Era, the HBK/Y2J feud of 2008, the Summer of Punk in 2011, and CM Punks 434 title reign which spanned the entire year of 2012.

You're silly.

 

[SoulTrain4]

If the network sticks as it is now I think we will see large buy ins in January for the Rumbles and after that 6 month run people will opt out because the best of WWE takes place between January and May. They will have seen the rumble, chamber and Wrestlemania at a greatly discounted price from normal.

 

[jrjolley]

The problem with many of the upsides is that they have a time stamp on them in regards to their relevancy. There will be a significant drop off come September, the Network wont be new anymore, the sights and sounds of Wrestlemania wont be present come September, and the allure of old content will be less as people will consume what they want, which leaves the Network where exactly?

There is also the very real chance that WWE will hike up the price, to make up for the disappointing amount of subscribers.

The same arguments used for the Network being this huge thing that was easily going to break 1-1,2 million on day 1, is used now for it to see this immense growth. I am not seeing it, its all front loaded.

There is a reason why they fired the person who was in charge of the WWE Network, they were led astray into believing their own fantasy world numbers and expectations.

WWE Network is not meant for casuals, because casuals cannot even handle 3 hours of Raw programming before viewership starts to drop off, they could not handle 3 hour Nitro's either. What makes anyone think they want EXTRA content that they pay for? Why do you think Smackdown and Thunder could never replicate the ratings of the A show's? Because the majority of people who watch can only take so much content before they are finished and ready to flip the channel.

Very good post. I agree with all of this, WWE has so much riding on a pipe dream really. As I said in my older post, i'm genuinely interested in how subs go after the 6 months are up.

 

[jrjolley]

LOL, what? Netflix is generally lauded in the entertainment community as having the incredible retention.

The WWE Network isn't designed for hardcore fans, it's designed for the casuals. The WWE isn't being beaten in any market anywhere EXCEPT maybe Japan by Japanese federations.

And finishing your reply, it's obvious you aren't watching the current WWE product, because this is the best it has been in well over 10 years.

In my experience, as someone not living in the US, Netflix subscribers come and go. It's not a constant. People tend to pay for things a la cart in situations like this, because certainly here in the UK, Netflix tends to remove content quite a lot because of TV rights.

MY other comment with regards to the quality of the WWE still stands. TNA in the UK outstrips the WWE with regards to viewership, and before anyone complains that it is on a free channel, makes no difference. Socker is the most popular sport here in the UK, hence many viewers will have some sort of subscription to watch Sky. I admit, this isn't a given, but slamming the idea that TNA is only a success because it's on free TV is stupid.

The network will really have to evaluate who it is marketed towards. Anyone thinking that it is marketed towards casuals has no idea about people's viewing habits. The casuals watch Raw for a bit then tune out because they get bored. Casuals hardly watch smack down. Casuals don't give a sod about NXT because it is seen as bush-league to them. Casuals are generally not the cord cutters either.

 

[bioshock]

Ah don't forget when they do get a million people, and it will happen when the UK comes on board, that will be about 10 million dollars profit per month for WWE or close to 6 or 7 million after the providers get their money. No way WWE would turn down that much profit per month, and I know it doesn't cost close to that to run the network on its servers.

But flat out, WWE just needs more exclusive shows and I don't mean Legends House, which I think is a great show if you were a fan of those guys growing up, I dunno how new fans from this generation think of it.

But they need PPV worthy exclusive kind of shows. And I bet once it goes world wide and UK PPV should be in the works, but UK PPV only on the Network. I can really see some Wrestlemania worthy events being exclusive to the network. Maybe not in a football stadium, but card booking worthy of a Wrestlemania.

 

[JustZackster]

That is some horrendous math. 10$ a month, PPV at 45 or 55$ for HD. So, 4.5/5.5 months to pay for the one PPV. Now at 1 million subscribers they will be on average 5 times above the buy rates of most of the shows. At 1 million they make the same cash and once it goes International, it will hit that 1 million mark I am quite certain.

Oh right! I'm forgetting it's $10/month. I was wondering why my math made it sound ridiculously cheap. Thanks for catching that.

 

[Pedigree1]

Will the Network Fail?? No i dont think it will at all but only 9.99 a month is pretty low IMO.. I thought so,when the price was first announced. At standard HD 44.99 for a PPV and 54.99 for HD! So basically a years worth of PPV can run 500-600 depending on if you get HD or not..

And before some smark comments on my math i dont really care about being on the nose. The network is at over 600K subscribers right now not bad at all.. Im sure the WWE expected some downfall at first,stocks and or investors getting nervous.. At the end of the year though,if its 1,000,000 or close im sure the WWE will be quite happy..

Having Brock compete at summerslam through NOC will help increase numbers as well.. There is so so much footage that has yet to air,its amazing.. The ppvs alone would take you about 2 years to catch up on! I suspect the WWE though,to increase the network to 14.99 and eventually 19.99 one day! That still will be a bargin

 

[sTyLnK]

The big question isn't if it will be a success, it has been and will be especially when it hits internationally. The big question is if subs can stay consistent and if it can remain at a reasonable price as time goes on.