The biggest surprise of the Q2 Results was the extensive developments related to the roll-out of the International WWE Network. In the next two weeks, the WWE Network is launching in "more than 170 countries" including Phase I targets Australia, Hong Kong, New Zealand, Singapore, Mexico, Spain and the Nordics. On the conference call George Barrios added France to this list, as well. Canada will also be launching the WWE Network but in that country it will be distributed as a premium television channel, not a streaming internet service, harkening back to the original concept. North of the US border, the WWE Network will be a pay-TV channel with an on-demand library and eventually an authenticated app (think HBO GO) for an experience akin to the domestic WWE Network. Notably absent from the list of upcoming countries was United Kingdom (which was announced for October 2014), Italy, UAE, Germany, Japan, India, China, Thailand and Malaysia. The plan for rolling out the WWE Network in these countries is likely contingent on negotiating specific agreements with the networks that recently renegotiated television rights with the WWE. It remains an open question whether the WWE Network is going to be internet-based or whether the Canada pay-TV model will be adopted in other places.
Licensing / Home Entertainment
It appears that both Licensing and Home Entertainment revenue is going to be down substantially. Some of the shortfall is from the Video Game License (transferring from THQ to Take Two Interactive) and lower sales this year for a game which wasn't released on the next-gen consoles PS4 and XBox One. We've already heard tales of talent disappointed with lower-than-expected royalty checks for WWE '14. Meanwhile, Home Entertainment sales (DVD & Blu-Ray releases) continue to limp along.Top sellers include Wrestlemania 30 (130,000 units shipped) and Goldberg: The Ultimate Collection (114,000 units shipped). Historically, Wrestlemania has been a top seller each year, but this year's status was unclear given that fans could watch the event in its entirety with the WWE Network.It also appears that the Ultimate Warrior's release (85,000 units shipped) did not receive the large death boost that many expected.
Subscriber Churn
As before, WWE refused to give any firm estimates about what their expected "churn rate."That's a measure of what percentage of the WWE Network subscribers renew after their first 6-month commitment. During the call, Barrios did mention that other monthly subscription video services seem to be expecting four to eight percent non-renewal, but they weren't willing to say whether WWE Network was going to be similar. While the majority of analyst speculation had been focused on the 6/30/14 WWE Network subscriber number (I had guessed 748k), it turns out that we should have been focused on WWE Network cancellations.There were over 128,000 WWE Network subscribers who effectively cancelled the service prior to the end of their full 6-month commitment.The reason given was "reoccurring payment issues". This was clarified during the Q&A portion of the conference call as coming mainly from the large lump of subscribers that had been acquired during the week leading up to Wrestlemania.The number of cancellations was so large that the average number of WWE Network subscribers during Q2 2014 was only 665,000 which is several thousand below the 687,287 that WWE announced after WM30. With nearly one in seven subscribers finding a way to avoid the six month commitment it's not too surprising that WWE announced they would start offering a pricing tier that included one-month commitments for the WWE Network ($19.99). If you're only interested in buying a single PPV (namely Royal Rumble, Summer Slam or Wrestlemania) this is the price that WWE is offering it at. It's a clever move, and they did acknowledge that a premium event like Wresltemania may be higher than the $20 price.
Netflix/Rebroadcast Rights/Hulu
Nothing meaningful was said about the Digital Rights space regarding WWE's current contracts with companies such as Hulu and Netflix.
Supplemental WWE Programming
WWE didn't discuss that Ion television's Main Event program stopped airing during the first week of April and moved permanently to the WWE Network. However, TV rights fees were up year-over-year on the backs of Total Divas revenue (a show that didn't start until Q3 2013) and contractual Raw/Smackdown increases. Television continues to be the most important driver for the WWE. They've inked a lot of deals lately, which is good news for their financial certainty, but it's clear they aren't anywhere near the mammoth live event rights some believed they were going to get with the domestic NBCU deal.
I'm a professional wrestling analyst, an improviser and an avid NES gamer. I live in Saint Paul, Minnesota and I'm working on my first book (#wrestlenomics). You can contact me at chris.harrington@gmail.com or on twitter (@mookieghana)
As before, WWE refused to give any firm estimates about what their expected "churn rate."That's a measure of what percentage of the WWE Network subscribers renew after their first 6-month commitment. During the call, Barrios did mention that other monthly subscription video services seem to be expecting four to eight percent non-renewal, but they weren't willing to say whether WWE Network was going to be similar. While the majority of analyst speculation had been focused on the 6/30/14 WWE Network subscriber number (I had guessed 748k), it turns out that we should have been focused on WWE Network cancellations.There were over 128,000 WWE Network subscribers who effectively cancelled the service prior to the end of their full 6-month commitment.The reason given was "reoccurring payment issues". This was clarified during the Q&A portion of the conference call as coming mainly from the large lump of subscribers that had been acquired during the week leading up to Wrestlemania.The number of cancellations was so large that the average number of WWE Network subscribers during Q2 2014 was only 665,000 which is several thousand below the 687,287 that WWE announced after WM30. With nearly one in seven subscribers finding a way to avoid the six month commitment it's not too surprising that WWE announced they would start offering a pricing tier that included one-month commitments for the WWE Network ($19.99). If you're only interested in buying a single PPV (namely Royal Rumble, Summer Slam or Wrestlemania) this is the price that WWE is offering it at. It's a clever move, and they did acknowledge that a premium event like Wresltemania may be higher than the $20 price. 
