10 Controversies Of The WWE Network

7. The WWE Network Is Another Expensive Division With An Audacious Break-Even Point

In a conference call discussing the WWE Network on January 14, Vince McMahon called the project the "right model, the right formula, the right time". However, when you dig into the company's projections and estimates for the WWE Network, there are some astounding financials projections. Just to break-even WWE needs to lure 1,000,000 U.S. subscribers. This is a company whose flagship weekly show, Monday Night Raw, only averages 4 million viewers. Can they really convince a quarter of their regular viewers to subscribe (in six-months increments)? (Actually, they need to convert more than that. We're talking household subscriptions, not viewers. That's an enormous task. Consider that since 2006, non-Wrestlemania PPVs have only averaged about 161,000 domestic buys. Wrestlemania has averaged about 665,000 domestic buys. (Source) This is a gigantic undertaking. To try and muddy the waters, WWE has thrown out some dubious numbers about how 62 million fans have an "affinity" for WWE content. While that lowers the number of people they need to convert to break-even from 25% to below 2%, such a sky-high number hardly passes a reasonableness test. Also, if WWE is expecting to lure all of these casual and lapsed fans, where's the far-reaching advertising campaign to alert them to the WWE Network? Consider the predecessor to the WWE Network -- WWE Classics on Demand (formerly known as WWE 24/7). At the peak, it only reached a few hundred thousand subscribers and generated a modicum of revenue. Before they shut it down, WWE Classics on Demand hadn't turned a profit in several years. Launching the WWE Network won't be cheap either. Even at the break-even point of a million subscribers, WWE themselves estimated costs at $55 million. WWE has invested millions in other ventures which did not pay off (such as WBF, XFL, The World Times Square Restaurant). Already WWE has spent almost $127M on WWE Studios projects just to generate $30M in profit losses. How many years will WWE tolerate mounting losses generated by the WWE Network?