mookeighana

Perhaps he's just terrified we'll discover how many copies of Rhonda Shear Up All Night bumpers he saved...

I don't think Bix or Chris went either, but I think they were able to cover it. Since it was streamed and what not, it's not like one needed to be there to cover it. Modern world and what not. That's setting side the quality of his coverage, which is a different thing. But honestly, what added benefit was there to fly out from the event to be there in person? John I would have loved to go; but it's not like I got an invitation. (I don't think WWE considers "self-publishing a Kickstarter book"/"blogger" as a legitimate news outlet) I would have really considered going too if that was a possibility since I was already travelling for work that week so I wouldn't have minded the timing. I do think there's the possibility that there's some conversations with WWE folks that might have been there if you sniffed around enough, where you could ask one or two real questions. But I know both Dave & Bryan ended up just with the WWE Superstars and then a few minutes with Perkins (where the only real questions could have been answered). But as was pointed out, I haven't seen or heard very much that wasn't part of the Network launch presentation. About the only detail that I've heard from Dave that I hadn't seen confirmed in a press release, investor presentation, conference call, or Q&A was that WWE PPVs replays for shows like this years Elimination Chamber would have a several week blackout before they'd be available for on-demand selection. Normally, I'd say that there's something you can learn when you're sitting with other professionals and talking about what you know, but in this case, based on Bryan's account - a lot of tech journalists were blindsided by the announcement, even though the strong outline of exactly what they were going to launch has been pretty darn clear for a month if you've been paying attention and reading the rumors.

Here were my notes: http://indeedwrestling.blogspot.com/2014/0...right-time.html slides here: http://wcc.on24.com/event/73/42/56/rt/1/do...2014__final.pdf (If that link stops working, let me know. I saved a copy. They'll be up on the Corporate website soon enough.) OPENING Vince McMahon thanks Investors for "baring with us through the years". Vince acknowledges they had explored the other models (traditional channel, premium channel) before landing on the over-the-top. He says that it's, the "right model, right formula, right time." He promises that everything is "synergistic". (He views that growing WWE is good for EVERYONE in the aggregate including USA or whomever they're on television with.) George Barrios takes over. Things I'm learning: WWE is especially counting on Tablets and growth in Smart TVs/BluRay players to fuel adoption of "streaming content". (It's interesting to see how PCs is essentially flat across the years.) WWE does acknowledge the demographic gap between OTT and TV networks. WWE throws out bought Netflix growth numbers but more interestingly MLB subscribership (about 3 million). That's an interesting service to compare against. One claim from the Network launch which I was curious about was "WWE Fans consume more online video than others". Here's the internal research that "back ups" that claim. Considering the nutty 52M households with "affinity for WWE", I don't know how much I'd bank on this. I was curious how WWE was going to handle Customer Service, and as expected they did out-source it to Harte Hanks - they are a marketing company which provides call center services and support for other brands. WWE is using the 52M number as the baseline (instead of something like the 4M domestic RAW Viewers or the "15M weekly WWE Viewers") so they can use terribly low adoption rates (2%-6%) that looks possible, instead of the 25%-90% numbers you'd need otherwise. The cannibalization number is interesting "up to $60M". (I had guessed $55M on 12/6.) International subscribers for phase 1 (UK, Canada, New Zealand, Singapore, Hong Kong, Nordic) is only between 250,000 and 1,500,000 subscribers. ($10 price point is also being advertised for the international service. Q&A Section They did insist they did a lot of testing on the elasticity of the pricing to reach $9.99. "We did a lot of testing; at the end we want to drive value for the audience. How do we deliver more value to our customers? That's what we were focused on." Q: Why aren't consumers able to sign up now? A: There is a lot of "timing issues around discussions with current providers and PPV", but didn't want to miss the 6-7 week run up to Wrestlemania. There's "contractual gymnastics". I think this is code for "we're trying to still sell Royal Rumble and Elimination Chamber". Responding to the DirecTV already threatening to drop PPVs, WWE is going to "continue to work with them" and they want to "ensure their fans have as much choice as possible. We'll work with them to make that happen." Q: Why are you comfortable with up to $60M in Cannibalization? A: "I've got confidence in our ability to execute. I can't believe that once someone gets a taste of it they are going to back out." Revenue Sharing Agreements - Roku, Apple: "There's a general standard that's set that goes from whenever the subscription comes from -- inside the platform (70/30 split), outside the platform (no split)." Expecting to spend about $20M in Programming (OpEx) in 2014. This doesn't include the PPV cost. (They're going to amortize the programming they've already created -- will appear on the P&L.) Q: Will there be a pre-paid annual subscription (at discount)? A: Yes, there will be pre-paid annual and you can give it as a gift. Questions I submitted (but were not answered): (from a longer list from last week) * Will the Network revenue and expenses be split into a separate revenue division for reporting? * Will the Network subscription numbers be included in the monthly KPI numbers? * How robust of a marketing campaign outside of the "normal" WWE channels will there be to advertise the WWE Network service? How much has WWE committed to spend for marketing this service? * What is the annual investment for the Network going to look like in terms of re-occurring and one-time costs? (They spoke a little on this regarding the $20M OpEx for new programming and whatnot.) No Perkins Miller.

This is something I've been saying: launching the network, particularly with including Wrestlemania, seemed like they were risking thumbing their nose at the sugar daddy. That's why I didn't think they'd want to launch before they had the TV rights negotiations wrapped up. But they did, because they figured they had to launch in Road to Wrestlemania mode. Its a gamble but that's how McMahons roll, I guess.

Michelle Wilson did say something about "another connected device that we're not allowed to announce" that sounded like AppleTV to me. Glad to hear this. When it comes to streaming devices that older adults use, AppleTV is high on that list.

I originally thought this might be the death knell of the DVDs, but programs like Breaking Bad still shift a ton of discs even though they are easy to stream both legally and illegally. Some people still like a physical product, and would rather watch it on their television, especially older fans who might not have the knowledge or inclination to watch it via a smart TV or a PS3/Xbox. Home Entertainment is a $28.9M annual business for WWE. It's definitely going to be hurt by launching the Network and putting materials up there. I think one reason they've been doing the $5 DVD blowouts at Walmart was to get ahead of announcements like this. However, you're right that it's not the end for DVD/BluRays. a) Older consumer (keep in mind more than half of WWE demographics are over the age of 37) are far more likely to continue to purchase physical media. That's why there's such a split in the Netflix Streaming vs Netflix DVD Rental population by age (DVD peaks in 37-48 while streaming is bigger in 18-36) Content is King. They're going to be putting releases in Big Box Stores (if BestBuy is gonna sell it, they're gonna stock it) and trying to get other companies (like Netflix) to license it. (On an related topic, I don't think we'll see the end of WWE materials on Netflix in 2014 by any means.) Plus, this becomes programming you can use on the Network and then use it to increase your library bragging rights. c) They're still publishing a magazine. They're still doing C-level PPVs. If they can turn a profit on it, it's worth doing. (WWE Films/Studios is another matter though!) My guess a few months ago was a 1/3 cut to Home Entertainment in 2014. We'll see how that plays out and whether they time delay DVD/BluRay releases versus availabilty on the Network by several months.

1. We don't know for sure, since WWE only reports the amount they get per worldwide buy. In 2012, the amount per worldwide buy was $20.60 (http://www.sec.gov/Archives/edgar/data/1091907/000144530513000441/wwe12311210kdoc-use.htm), and using this number, Chris had calculated the average revenue per domestic buy to be $29.92. However, in the third quarter of 2013, the average revenue per worldwide buy was $19.35 (http://www.sec.gov/Archives/edgar/data/1091907/000109190713000015/wwe-9302013x10q.htm), so the domestic number may be lower. 2. In 2013, the five PPVs during that six month period generated 1.243 million domestic buys (using Dave's figures at http://www.f4wonline.com/component/content...-new-inductees). Assuming the PPVs would take a bit of a hit this year and the domestic buys fall by 75% this year, that would mean about 900,000 lost domestic buys. To be on the conservative side, I will assume that the average revenue per domestic buy will be $28, resulting in $25.2 million in lost revenue. During the six month period. The problem is trying to figure out the cut WWE will get on the subscriber revenue, now that there will be additional costs (bandwidth, customer service, credit card fees, etc.). Maybe I'm misunderstanding this, but when George Barrios spoke at the recent UBS conference (http://seekingalpha.com/article/1890451-world-wrestling-entertainments-management-presents-at-ubs-41st-annual-global-media-and-communications-conference-transcript?part=single) he's expecting about $50 million in incremental OIBDA after the network hits one million subscribers. Based on earlier projections given in their investor materials, they seem to believe PPV cannibalized $5-10 million for every additional million subscribers (under the premium cable model). If we assume $10 million, that would seem to indicate they think they will get $60 million per million subscribers per year. As such, I'm assuming their cut will be half. If we have $25.2 million in revenue, divided by half of the $60 ($30), we get 840,000 subscribers on PPV revenue. Note that this will be much lower during the other six months, since there will be no Mania and SummerSlam. 3. Trying to figure out the production budget is difficult. In earlier investor materials, they estimated their production expenses to be $25-30 million annually (which Dave thought sounded low when I asked him about it). Dave has talked about the estimated production budget recently, and if I remember correctly, he said he expected to be around $35-50 million. If we assume it ends up being $40 million, we take half of that ($20 million) and divide it by $30 to get 667,000 subscribers. For the first six months, for just the production budget and lost PPV revenue, my initial estimate would be 1.507 million. Here's my long explanation for how I came to suggest that WWE might be getting more than $30/domestic buy in 2013.... WWE Published the Domestic/Int'l PPV Split (2006-2011) in an investor document (page 30): PPV and WWE Classics on Demand 2006: $77.7 (domestic) + $19.5M (int'l) = $93.6M PPV + $3.6M WWE247/Other = 20.1% int'l (5,744,000 buys in 16 events) = $16.30/buy worldwide (approximately 61.7% domestic buys) 2007: $82.4 (domestic) + $17.7M (int'l) = $94.3M PPV + $5.8M WWE247/Other = 17.7% int'l (5,218,000 buys in 15 events) = $18.07/buy worldwide (approximately 65.2% domestic buys) 2008: $81.4 (domestic) + $17.8M (int'l) = $91.4M PPV + $7.8M WWE247/Other = 17.9% int'l (5,034,000 buys in 14 events) = $18.16/buy worldwide (approximately 66.6% domestic buys) 2009: $71.8 (domestic) + $15.0M (int'l) = $80.0M PPV + $6.8M WWE247/Other = 17.3% int'l (4,490,000 buys in 14 events) = $17.82/buy worldwide (approximately 61.7% domestic buys) (The domestic/int'l buy split was calculated from the 2006-2013 Buys table, which in turn was derived from monthly KPIs.) If we use the int'l percentage against the PPV price (which could be a bit misleading because I doubt WWE 24/7-COD availability was as prevalent internationally as it was in the US), we see.. 2006: $93.6M x (1-.201) / (.617 x 5.744M buys) = $21.11/domestic buy ($40.35 avg selling price for domestic PPV) = 52.3% split domestically; $8.54/int'l buy 2007: $94.3M x (1-.177) / (.652 x 5.218M buys) = $22.82/domestic buy ($42.40 avg selling price for domestic PPV) = 53.8% split domestically; $9.18/int'l buy 2008: $91.4M x (1-.179) / (.666 x 5.034M buys) = $22.36/domestic buy ($42.16 avg selling price for domestic PPV) = 53.0% split domestically; $9.76/int'l buy 2009: $80.0M x (1-.173) / (.617 x 4.490M buys) = $23.89/domestic buy ($42.26 avg selling price for domestic PPV) = 56.5% split domestically; $8.04/int'l buy a) I had done an alternate calculation which had domestic PPV around 50% to 55% of the revenue which sounds about right to me. WrestleMania 29, Extreme Rules 2013, Payback 2013, Money in the Bank 2013, SummerSlam 2013 was approximately $34.9M domestic PPV last year. That's almost 582,000 subscribers. I think they'll get between 400k and 600k in the first 6 months. I think at least 250k are going to be driven by offering a mega-event Wrestlemania on there. I don't believe they'll break one million subscribers in 2014.

There was a line in the 8-K that was filed today, "Fans can subscribe to WWE Network beginning at 9am ET on Monday, February 24 at WWE.com, and for a limited time will be offered a free one week trial."

Live stream will be up at: http://www.youtube.com/watch?v=en8lldW-Lg8 Does the #BestValueinEntertainment hashtag suggest they're going to be cheaper than Netflix? I'm still sticking with my $9.95/month guess.

I tend to think you answered your question there. Their audience watches the shows. They also have a fairly well traffic'd website to market the network on. That's likely where they'll focus on. In turn, one of the few things they market in a give year is Wrestlemania. Since this is #30, much like #20 and #25 it will probably have a bit more marketing than the average Mania. So they'll likely piggyback some Network marketing on that marketing. They also have likely built up a large pool of e-mail addresses from customers / subscriber / others who have bought things from WWE.com or subscribed to things there or gotten on their mailing list, etc. They can blast stuff out that way. They pimp the shit out of Twitter, so they'll likely try that as well. It's not likely they are going to spend $50M on marketing it. They will probably produce some ads for it, but it's the WWE: they Production team can do that falling out of bed, as they to promo pieces every week of the year. My guess is that they'll try to draw in from their current base first, then look for ways to expand it over time to former fans and non-core fans. John They need 1 million subscribers to break even. Seems like they'll need to do something beyond their normal hype. I agree. With the launch event being at Vegas/CES, I believe the strategy is getting the word out in circles far beyond the normal pro-wrestling chamber. Obviously they'll be advertising all over their programming, but I have to wonder whether they'll use mailers to people who have ordered from ShopZone. Would they go as far as spend on a SuperBowl Ad (despite the debate on the efficacy of them) or some other big media campaign? Especially when you think about the demographics of streaming subscribers versus the WWE demographic, it creates a quandry -- do you target the older demographic (lapsed WWE fan - something like USA Today spread) when they have a lower propensity for using an alternative streaming service?

I mean, it's not hard to get to $120M in costs: $60M+ from Domestic PPV (including $20M+ for WM), $30M to $45M in startup/infrastructure costs (still haven't seen a breakout of what they've actually spent). I expect that both WWE.com ($24M) and Home Entertainment ($29M) segments will be negatively impacted by this. If they get up to a million (domestic) subscribers, that's decimating the domestic PPV business for certain. An over-the-top model moves the technical support/customer support and billing costs into WWE's camp (instead of the MVOD domain) which certainly inflate costs even before you deal with the VOD element and now the enormous network bandwidth demands. From what I understand, MLBAM is involved heavily (not just a consulting role but an infrastructure role) so I expect they're going to handle a lot of the unique to over-the-top headaches. As for the "will it take half", I assume you're getting there by the logic that Cable/Satellite Premium Channel results in WWE getting less than 50% of the monthly fee and the over-the-top model starts with WWE getting about 100% (assuming that we'll see credit card fees as line-item expense as opposed to a before the revenue even hits WWE sort of transaction)?

Tony Nese's brother in law.

Yeah, that popped in my head for two Netflix-related reasons. (a) When you read Netflixed, you realize that getting the word out about their service was a HUGE piece of the puzzle for them (hence the free subscriptions packed into DVD players) and ( When you read the Netflix SEC filings, you still see that Marketing is a large line-item for them basically behind the enormous content costs (which WWE doesn't have to deal with) and the delivery (both digital/physical) infrastructure.

I threw together a list of some of the questions I'd love to ask WWE at tomorrow's press conference: http://indeedwrestling.blogspot.com/2014/0...orrows-wwe.html I know that the majority of these questions would just receive a normal PR answer of "it's going to be great; how do we know yet? everything happened just like we planned!" but maybe one or two of them would actually give us some real insight to the past, present and future for this ambitious project. What questions do you have which you'd love to see answered?

Network isn't mentioned in the document on that link. Business Wire press release also doesn't mention it: http://finance.yahoo.com/news/tune-advisor...-190000600.html Did they change something? Originally, they added something to the Corporate Calendar Then they sent out an email (from IR Alerts) which mentioned the WWE Network Announcement, but you're right that the actual press release does not have the Network mentioned. Methinks it's a right hand-left hand mixup.

I tried to do some timeline stuff in the original piece about the WWE Network: http://indeedwrestling.blogspot.com/2013/1...rk-succeed.html I include links to most statements but I also emailed you a copy of the original word document where I cited some sources that weren't hyperlinked in the blog article.

BTW, if anyone was doubting that this wasn't the Network launch announcement, the Corporate site sent out a press release today entitled, "WWE Event: WWE Network Announcement". They sent out a wacky link that forgot the snl.com portion, but here's the corrected address. http://www.snl.com/irweblinkx/file.aspx/?i...;fid=1001181976

They said 9:30 on TV last night and the FB invite now says 9:15 so it was probably just a buffer/typo at first. I hope the legends answer tech journalist questions on bandwidth and pricing theory.

Dennis >Mark (Phinneas > Henry)

I know at least one video game website had posted a copy of the invitation saying they had no idea why WWE was sending it to them but they were going to cover it. I can't find the link on ipad. I do hope at least some organization with a clue reports. If it is a network announcement there isn't a reason that people can't be well versed on he lead up to this.

Cool idea, but in a worked sport, I don't think they'd want to risk you get the angle where it's Harper yelling "bodyslam, elbow drop" to Rowan on the apron.

Just scanning through some old SEC documents, I noticed an interesting reference in the 3/15/13 Schedule 14A filing: Just underscores that they believed they were going to launch something in 2012, but ultimately despite everything, couldn't get it going.

More data on the top 21 wrestlers (top 15 voting) was released. I updated my website: https://sites.google.com/site/chrisharringt...P-FIFTEEN-RANKS

Was it the the Scarborough market research report on combat sports from the 5/6/13 issue?

I'm out of the loop- this was a new term for me when I read the Harris poll. Curious to read links.