What Does 667,287 Subscribers Mean For WWE Network?
WWE has plenty of options on how to move forward. They can stay the course and just worry about the TV Rights negotiations. The next big juncture will be when the first round of six-month subscriptions start renewing in late August. Will WWE bump up creative and programming to ensure the Fall schedule has added incentives to retain subscribers? WWE may also decide to tweak the WWE Network in 2015. The most likely changes would either be (a) raising the subscription price or (b) isolating premium content (i.e. taking Wrestlemania off the WWE Network). Before the WWE Network launched, WWE spoke only in potential price ranges. They insisted they did some price elasticity studies and thats how they came up with the $9.99 price point. While that may be the right decision for launch, theyll soon have a good understanding of the use and interest in the WWE Network during the non-Wrestlemania cycle. The reality is that niche programming, such as the WWE Network, could easily charge 20%-40% more and still represent a substantial value to the dedicated WWE consumer. Moreover, a higher subscription price lowers the subscription break-even point. For instance, at $15/month, with the current base of subscribers, the WWE network would generate the $115M that was intentionally estimated as the break-even point. Exactly how severe subscriber attrition would be depends on how WWE positions this price adjustment it could be a disaster akin to Netflix or as successful as Amazon Prime. Public Relations plays an enormous role. Alternatively (or additionally), WWE could choose to remove live Wrestlemania from the WWE Network. It would return to be being offered on traditional PPV and also WWE would offer direct Wrestlemania streaming (just as they were doing with gaming consoles/wwe.com prior to launching the WWE Network). Wrestlemania is a PPV juggernaut that in previous years generated more than $40 million dollars split between WWE and the MVPDs (Multi-channel Video Programming Distributers). This month, the WWE Network subscribers generated less than $7M and its unknown yet how much traditional PPV generated of the remaining $13M bogey. Putting Wrestlemania on the WWE Network during the launch year was an inspired idea and a terrific selling point. However, now that youve proven the service and hooked the hardcores, its a very dangerous place to continue to commoditize your biggest event of the year. Once youre selling Wrestlemania as just another monthly $9.99 event, you risk devaluing one of the last important cards that WWE holds. A WWE Network that still has live Royal Rumble, Summer Slam, all the B-PPVs alongside a vast (and growing) video library on demand, is still worth the subscription price. These lukewarm subscriber numbers prove that you can only do so much to lure your fans to an over-the-top service. Furthermore, returning Wrestlemania to traditional PPV is a huge bargaining chip with the Cable & Satellite providers. This gives WWE the ability to make a good-faith effort that will ultimately benefit both parties. Well know a lot more about the WWE Network Financials at the end of the month when the Q1 report is revealed and when the next set of Key Performance Indicators is released. In summary, the 667,287 subscription number is at the bottom end of what could be considered acceptable WWE Network subscription numbers. The growth between now and the end of the year is likely to be weak and WWE may need to alter the structure (price/content) of the WWE Network in 2015 in order to break-even on the project. Ultimately, while the $WWE stock is being hurt due to sky-high expectations not being met, the true test for the WWE is how they make out on domestic television right negotiations. For more information about WWE Analytics and Analysis, follow me on twitter (@mookieghana) or send me a note (chris.harrington@gmail.com). Read all my exclusive content at whatculture.com