Growing up, I couldn’t get enough of what was then the WWF. I had the action figures, the ring, Hulk Hogan t-shirts, and spent far too many hours watching it on television believing that everything was real and Roddy Piper was the biggest jerk on the planet.
Around five years ago, when my nephew was six years old, I saw him in a John Cena shirt. In a way it brought me back to my childhood, so I spend a good half hour talking to him about what was going on in the world of wrestling. It was so refreshing to see how the spectacle looked from the eyes of an innocent six year old, when all of these people look like super heroes to him. From that point on, I dove back in watching a little, but reading a bit more on the business aspects of the company.
For one, I have nothing but respect for those athletes. There is no off season for them and they are on the road at least four nights each and every week slamming their bodies around. The show Monday Night Raw is the long running episodic series in the history of cable. Therefore, they are getting eyeballs on their product. While this is great, it was what they did two years ago, that could be a major sign of things to come for every entertainment/sporting outlet.
In February of 2014, the WWE Network was launched. For $9.99 per month, you could watch all of the 12 pay-per-views put out that are normally priced around $49.99. You not only got the pay-per-views, but the network launched with old PPVs as well as some original content. The main marketing ploy was toward the late 90s era which is known as the ‘Attitude Era’ with people like Stone Cold Steve Austin and The Rock. The network was launching a 12 part series called the Monday Night War. It seemed their idea was to attract Dads who may have watched the product at this time, and now can begin watching with their children.
What is most exciting to me from a business standpoint is the risk that the WWE has elected to take with the network. They were basically cannibalizing a major revenue stream as they were basically doing away with the pay-per-view model. To give you an idea, the biggest event of the year by far is Wrestlemania. In 2013, before the network was launched, there over 1.7 million people purchased the pay-per-view around the world at $59.99. Therefore by launching the network, WWE was basically lighting fire to over $100M for this one event alone! Needless to say that had have been a little scary for shareholders. That said, 15 months after launch, the network had over 1.3 million subscribers. If you count all of those subscribers as sticking around for the whole year, you are talking about $156M in revenue, so it hasn’t paid off just yet. Its important to understand that the network is not nearly the only revenue source for the business. As mentioned Monday Night Raw is a huge ratings machine for the USA Network, so WWE is making a pretty penny for the rights. Along those lines, merchandise and the gates from the live shows are big numbers as well. Wrestlemania 32 will be held at AT&T Stadium in Dallas in April and has already sold out more than 100,000 tickets.
What is interesting to watch now is how will WWE continue to evolve to make the network more essential to its fans? If they succeed, will others follow suit? Can you imagine a day where you have to pay $30 a month to see anything about the NFL? I don’t think we are that far away.
That said, WWE is all in with the model of the network. They are constantly adding old episodes and investing in original programming. The asset that they are building is beginning to show dividends as the stock price is up 43% this year.
Enjoying the soap opera of professional wrestling is a bit childish, but keeping an eye on how they are attempting to revolutionize the way we ingest entertainment is more than enough to keep me watching.