The WWE Network is one of the most ambitious plays in the history of sports and entertainment. A multi-million dollar company completely changed their business model and revenue stream in the hopes that they could serve content directly to fans. We might look back several years down the road and see WWE Network as a groundbreaking step that fundamentally changed the television industry as sports leagues and more content providers fully embrace digital and over-the-top services that go directly to consumers. If it fails, we might eventually mention WWE Network in the same breath as the XFL. That is what is at stake with the success of WWE Network.
For fans, the network has to be considered an incredible success. It is now much less expensive for loyal or hardcore WWE fans to have access to every special event for much cheaper as they don’t have to shell out $50-60 every month for pay-per-views. Perhaps most importantly, live streaming has held up well during these events when the most people are watching at one time. Furthermore, with the entire historical library of WWE, WCW, and ECW now available at the click of a button, it’s a treasure trove for anyone who called themselves a wrestling fan in the last 30 years.
As a business model, WWE Network is facing a bear market and much more uncertainty over its short and long term success.
WWE released their latest financial figures and it comes with some less-than-exciting news for the growth of WWE Network. In the last quarter, the network was only able to add a meager 33,000 subscribers to reach 700,000 total. And that was with a free preview that was offered during the quarter. As a whole, WWE lost over $14 million in the second quarter of the year.
WWE announce Q2 earnings. Its over the top digital net, WWE Network, now at 700K subscribers. Minimal growth in last quarter
— Eric Fisher (@EricFisherSBJ) July 31, 2014
WWE Network was at 667K subscribers out of the chute. Went only to 700K in last quarter. Its stated goal of 1M by year end now uncertain
— Eric Fisher (@EricFisherSBJ) July 31, 2014
The poor growth for WWE Network comes on the heels of what was seen as a bad television deal signed by WWE with NBC Universal that sent the company’s stock tumbling, being cut almost in half. WWE saw their rights fees increase by a fraction of what was expected. With these losses, WWE had to make many budget cuts earlier this year to stop the bleeding. Business has been so rough for WWE recently that Vince McMahon is no longer a billionaire… just a millionaire several hundred times over. That news combined with the lack of momentum for WWE Network has been… wait for it… a real Stone Cold Stunner for the company. (I promise that’s the only terrible wrestling-related pun in this column.)
Moreover, it’s a critical time for WWE Network as the initial six month subscriber windows will end right after another big WWE pay per view this month, Summerslam. Just how many of the original subscriber base will re-sign with the network? My guess will be the vast majority. But if even a small chunk of subscribers drop off, we could see WWE Network suffer a net loss from where they were after WrestleMania – 667,000 subscribers.
In light of the stagnation, WWE is fast-tracking the international launch of the network. WWE Network will launch in a total of 170 countries starting August 12th. It’s a massive undertaking in a short order of time, but it has to be done now as the company has stated it would need 1 million subscribers for the network to break even.
To coincide with their earnings report, WWE announced a 10 year rights deal with Rogers in Canada. Rogers will launch WWE Network as a pay channel across the country in addition to being the home to its weekly television programming. These developments should lead WWE towards the break even point given its global fanbase, but time will tell once again just how many of those subscribers stick around and how the company can attract new subscribers. That latter point has obviously been a struggle with tepid growth stateside.
With these current developments, it’s still true that patience is needed for WWE Network. This was an industry game-changer and its story isn’t going to be written after just one year. Although current numbers haven’t been kind to WWE Network, the network is all-in on making sure it is a success. If the company can reach the break-even point worldwide, then it can focus on reaching new subscribers and continuing to make the network profitable.
That seems to be the biggest challenge at the moment with only adding 33,000 subscribers last quarter. Has WWE Network (and the wrestling business as a whole) hit a peak? Or are there new subscribers out there the company can reach to ensure that this transformational step for sports and entertainment is a winning one.