WWE Network finally happening

[mookeighana]

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

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.

[Bix]

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

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.

 

Title of the file still says "Network" in it.

[mookeighana]

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

 

Here's some of the questions I'd love to have answered:

What happened with the negotiations with MVPD (Multi-channel Video Programming Distributors) to launch the WWE Network as either Premium Channel or as a part of the normal tier of channels (taking the place of something that already had coverage like G4)?

What specifically did WWE learn about Netflix's success that led WWE to believe that an over-the-top network was now viable in 2014?

What is the relationship with MLB Advanced Media and WWE Network? Are they providing any backbone and tech. support or were they just consulting on the process?

How does the WWE Network service compare and contrast to UFC 'Fight Pass' network?

What is the rationale behind the Network pricing? Are you comparing to the monthly Netflix, Amazon Prime Instant Video, Hulu or against traditional PPV costs?

What is the roll-out schedule for this in terms of international expansion? Do you anticipate issues with Canadian customers due to ISP data caps?

How does this launch correspond with Television Rights negotiations (both domestically and internationally)?

In your projections do you expect to draw mostly from active WWE viewers or do you anticipate this service will be attracting a substantial percentage of lapsed fans?

How soon will replays of current WWE programming be available on the Network?

How does the percentage of monthly subscription cost that WWE receives through an over-the-top WWE Network compare against what they would have done with normal channel clearance and with premium channel subscriptions?

How similar is programming an "over-the-top" network akin to programming a traditional television network?

What's the timetable for remaining committed to this project?

What portion of domestic PPV and Home Entertainment Sales are expected to be cannibalized by this venture?

Is there a strategic direction concerning the future of Wrestlemania as either a PPV event for 2015 onwards?

Given the rash of streaming event failures in the past with other companies what safeguards are being put in place to prevent buffering and crashing for major events?

How soon will subscription numbers be available?

How will the spending for original content compare to the production costs for a show such as Total Divas on E!?

What are the licensing and royalty issues involved with airing old footage on the WWE Network and with on-demand content?

What are the reasonable subscriber metrics for the 30 day, 90 day, 180 day marks?

What is the annual investment for the Network going to look like in terms of re-occurring and one-time costs?

Will the Network revenue and expenses be split into a separate revenue division for reporting?

What's the relationship between WWE Films/WWE Studios and the WWE Network? Will WWE remain in the movie business?

Does this signal a forever departure from the monthly PPV cycle? How many more years do you expect a sizable portion of viewers will continue the traditional ordering methods? Will this change how television is programmed, especially alongside large new TV rights deals starting in 2015?

For international distribution, will there be a focus on English-speaking countries first?

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?

How do the demographics of the normal WWE Network subscriber compare to the normal WWE television viewer? (How do they reconcile the split between strong skew of younger folks using streaming services compared to older people still with Cable & Dish TV subscriptions?)

How will the WWE Network launch affect the availability of WWE material on Hulu, Netflix and Youtube? (Also, what's going on regarding Yahoo!?)

Has the WWE completely given up on the idea for a traditional channel to be launched alongside the over-the-top WWE Network?

How will these events affect payments to talent? How can you estimate "buys" for PPVs and will that matter in the future?

Will there be any advertising or commercials on the network?

Are you expecting to have live interactive programming such akin to WWF LiveWire?

What role does the WWE App play in this Network launch?

What future on-demand options do you anticipate offering?

Will the launch of the network correspond with additional interactive advances in the WWE portfolio?

How do you reconcile any contractual issues that might arise about exclusivity on PPV airings - especially in international markets?

What about content that may seem especially vulgar or distasteful in current television norms (racist, homophobic or xenophobic topics from territorial archives) - will there be selective editing around these angles?

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?

[David]

Going by the numbers WWE released in their investor materials, and the fact that a million subscribers are going to be needed to break even, is it fair to suggest that the added costs from going online (as opposed to cable and satellite) could take as much as half of the subscriber revenue?

 

(That's supposed to be a question for the forum.)

[Loss]

The question about what type of marketing campaign they have planned and how much they intend to spend on marketing would be the one I would ask for sure.

[mookeighana]

The question about what type of marketing campaign they have planned and how much they intend to spend on marketing would be the one I would ask for sure.

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.

[Loss]

Also, since the network does have appeal to people who don't watch WWE anymore, I do wonder how/if they plan on advertising outside of their own programming?

[Loss]

I'm also curious if they'll be doing any microtargeting based on the on-demand content that is accessed the most, but I can see them considering that information privileged, for now at least.

[jdw]

Also, since the network does have appeal to people who don't watch WWE anymore, I do wonder how/if they plan on advertising outside of their own programming?

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

[Robert S]

It's not likely they are going to spend $50M on marketing it.

There are about 10000 Linda McMahon political campaign jokes that could be derived from above sentence.

[Loss]

Also, since the network does have appeal to people who don't watch WWE anymore, I do wonder how/if they plan on advertising outside of their own programming?

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.

[mookeighana]

Going by the numbers WWE released in their investor materials, and the fact that a million subscribers are going to be needed to break even, is it fair to suggest that the added costs from going online (as opposed to cable and satellite) could take as much as half of the subscriber revenue?

 

(That's supposed to be a question for the forum.)

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)?

[mookeighana]

Also, since the network does have appeal to people who don't watch WWE anymore, I do wonder how/if they plan on advertising outside of their own programming?

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?

[Matt D]

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 think the guys they have for the launch event is a good sign that they are going for an older demographic. I honestly wouldn't be surprised if they cart Hogan out as a surprise.

[David]

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)?

I was going by something George Barrios said at that UBS conference recently:

 

"If you went down each line item they differ between traditional and over-the-top distribution. Pricing is different, splits are different, costs are different but similarly about a million subscribers you breakeven with your pay-per-view cannibalization. 2 million to 4 million you are in the $50 million to $150 million of incremental OIBDA, so a real transformation opportunity with the network."

 

I was also using something from the 1st quarter investor materials, specifically page 21: http://webcache.googleusercontent.com/sear...=clnk&gl=us (I could only get the cache version)

 

Going by those estimates, WWE had determined that the average monthly revenue per subscriber would be between $3.75 and $5.63, and the estimated incremental operating income would be the same as that of an over-the-top network.

 

While there will obviously be different costs (and the cannibalization will likely be less under an over-the-top network), is it fair to suggest that the added costs could reduce their take to what they would've gotten from the providers under a premium channel model?

[jdw]

Also, since the network does have appeal to people who don't watch WWE anymore, I do wonder how/if they plan on advertising outside of their own programming?

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.

 

If they spend $50M on marketing, they're going to need more than 1M to break even. You're adding additional costs to the project, and likely with little ROI on that $50M.

 

WWE Fans watch WWE Programing. It's not like people watching American Idol who aren't wrestling fans are going to see an ad for WWE Network and think, "Shit... I need to pay some money to check this out" when there's Free Shit over there on Raw and SmackDown each week.

 

John

[Cross Face Chicken Wing]

It's not likely they are going to spend $50M on marketing it.

There are about 10000 Linda McMahon political campaign jokes that could be derived from above sentence.

 

It might not be all that different from a political campaign. If WWE can't get people who are interested in wrestling (past or present) to subscribe, it's going to flop. Kind of like political candidates fail if they can't build support and drive turnout among people who agree with their positions.

 

I'm sure WWE's marketing efforts will reach further in scope eventually, but for now, they gotta get wrestling fans to buy into this thing.

[Bix]

What's the best way for WWE to present this to the tech media today to make sure they cover it? Push the death of PPV, the size of the online library, and the social components? I can't think of anything else since there's no groundbreaking technology involved.

[David]

Something about how cable is dead and a la carte streaming services are the future? It may not be entirely true, but I could see some tech journalists agreeing with it.

[Matt D]

Do they want to mess around with that while negotiating for new TV deals?

[jdw]

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.

No doubt. But launching something at CES isn't a $50M marketing drop. It's something that all sorts of companies do. I work for a company with significantly more revenue than the WWE... like 20-25 times it, depending on currency exchange rate fluctuation. We're at CES every year. We don't spend close to $50M on it.

 

It's simply standard stuff for companies to do. It's hardly the only time the WWE has gone to CES.

 

 

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.

"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." -jdw

 

 

 

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?

That went into my point on piggybacking the Network onto marketing/advertising for Mania. A major ad, or ad campaign, for the Network is hard to justify on an ROI standpoint for just the Network - we're talking about a marginal chance of reaching likely subscribers who don't what WWE TV regularly or semi-regularly. But if you bootstrap it as a secondary element to a Mania XXX ad, where the ROI is to get people to buy the anniversary Mania, then you are plugging two revenue streams at once, and lead with a major one that is far more likely to get a pop.

 

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?

USA Today has an average daily circulation of 1.4M readers for the print version, another 250K for digital delivery of the paper... but that digital number is inflated by double counting of single readers using multiple devices. How many of those 1.5M are they really going to shake out to sub to the Network?

 

On the flip side, if they're doing a Mania spread in USA Today (and/or other papers), and 1/3 or 1/4 is devoted to watching the Network "on the Road To Mania", then you're double dipping with the ad: trying to get people to impulse on Mania, and trying to get them to buy the Net.

 

I'm sure they have a Marketing Budget for the Network. But I'm pretty confident that the majority of the marketing of the Network will be:

 

* on existing WWE Content (Raw, SD, other TV, their own Website) that their core fanbase regularly watches/visits

 

* in association with Mania marketing

 

* direct marketing to a database of fans / customers they've built up over the years

 

* online marketing

 

On the last one, it's pretty funny how I suddenly am getting shoe ads on the "tower ad" on the right hand side of my Yahoo mail account after buying a pair of shoes online earlier this week. Obviously Yahoo scans the mail and provides related ads. I got a ton of Dr. Who popping up all over the web after ordering a gift set.

 

This isn't an expensive form of marketing, gets to people who have devices, allows the Network to be part of a larger WWE marketing campaign that also pimps other products in a timely fashion (I wasn't getting ads for just one Dr. Who product... but a wide variety of dvd's), etc.

 

Granted... the WWE may think running a Super Bowl ad is the way to go. The ROI is nuts, but we all tend to agree that the WWE has made mistakes for years on their Network plans. Another one wouldn't be surprising.

[jdw]

It's not likely they are going to spend $50M on marketing it.

There are about 10000 Linda McMahon political campaign jokes that could be derived from above sentence.

 

It might not be all that different from a political campaign. If WWE can't get people who are interested in wrestling (past or present) to subscribe, it's going to flop. Kind of like political candidates fail if they can't build support and drive turnout among people who agree with their positions.

Linda got 498,341 and then 637,857 votes for her $100M. Which is a lot of jack to spend in a state of 3.6M people.

 

 

I'm sure WWE's marketing efforts will reach further in scope eventually, but for now, they gotta get wrestling fans to buy into this thing.

That's the key. They have millions of people who watch the TV every week. If they can't get a large number of *those* guys to pay, then they're fucked.

 

It's a bit like the NFL's DirecTV package. You can spend a lot of money marketing it during American Idol. But if the people who watch the 32 NFL Teams regularly don't sub, then they're fucked. And in the end, that's who sub to the NFL Sunday Ticket: the NFL Hardcores who want to watch more than just their local team for free.

 

John

[David]

A couple extra questions that I hope will be addressed:

 

1. What is your stance on password sharing?

 

2. Will subscribers be able to watch content on multiple devices simultaneously?

[mookeighana]

 

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.

[Robert S]

That slogan sounds for me like they will go the route of trying to sell the size of their library.