What Is The Future Of Domestic WWE PPV?
Meanwhile, will WWE Network revenue fill that $28M gap? Currently, the WWE Network has around 670,000 subscribers. Assuming a modest growth rate of about 2% per month, theyll probably end the year around 800,000 subscribers. Those subscribers would generate about $70M in 2013. However, its not clear that WWE is getting all of that money. People who subscribed through some services, particularly AppleTV, are splitting the revenue between WWE and Apple. Also, the cost of getting their App launched on so many platforms (including Roku & next Gen consoles like Xbox and PS3) was that WWE didnt have much leverage when it came to negotiating contracts. Theyre probably only getting about 80% each subscription. So, $54.5M in PPV plus $55.7M from the WWE Network is plenty, right? Wrong. While $110M is certainly more revenue than WWE generated in 2013 on PPV alone, its going to be a lot less profit. First off, running the WWE Network costs about $55M. The cost of producing PPVs doesnt drop just because revenue generated is falling. Instead, WWE will probably spend at least $39M on the PPV tapings and broadcasts. So, WWE will be lucky to walk away from 2014 with $16M profit on WWE Network+PPV. And compare that to the $34M they made in 2013 (which was actually down from the $45M they made in 2012!).
The only scenario where WWE comes out ahead in 2014 would involve a ludicrous amount of WWE Network subscriber growth combined with an unfathomable number of WWE fans continuing to buy WWE PPVs via traditional means. Thats why WWEs domestic TV rights negotiations are so important. What WWE can get from the bidders (likely a combination of NBCU with Raw and Viacom with Smackdown) will determine whether the company is poised for massive financial success in 2015. The WWE Network, at best, will barely break-even this year. Unless they discover an enormous, untapped pool of wrestling fans (and keep in mind their international launch targets are just 25% of the US market, so theyre not counting on a majority of growth there), their far-out estimates of 2.5 million subscribers generating hundreds of millions of dollars in profit are just mythical financial what-ifs scenarios.