WWE Network finally happening

[Timbo Slice]

I know some people who travel for business outside of the United States. Will the feed be blocked when they leave American soil?

It'll most likely be linked to IP address. Using the MLBAM model, MLB.tv goes by the IP address you're accessing it from, which then determines the blackout restrictions. Same rules would apply here. Meaning that unless the people you know have a VPN that allows them to access a US-based IP address, they'll be out of luck for the time being.

 

I don't see them doing it based on the physical address you sign up with. That would just lead to a whole mess of problems.

[anarchistxx]

On Sky Go streaming service you can register to two devices, so it may be something similar. Could somebody from the UK conceivably subscribe to the network and then view through a US proxy?

[JNLister]

Will they even bother geo-blocking while it's still only available in US? I'd have thought the real problem would be signing up in the first place as you'll presumably need a US credit card.

[pantherwagner]

Yeah, same as John, I thought they'd zone control by making you pay with a US credit card. But they will most likely do whatever MLB is doing until there are enough complaints.

[JoshEngleman]

I think it's pretty interesting that it now costs more to subscribe to a site that covers wrestling (Wrestling Observer) than it does to subscribe to the product itself.

[Lust Hogan]

Question: If I sign up for the network right before Wrestlemania and pay for the 6 month commitment wouldn't I also get SummerSlam too? If so, why then would I want to renew after the 6 months when the programming has traditionally been bad from SS until RR? Just the content and free PPVs? I wonder if WWE will do something like a 6 month commitment from Feb., 5 month from March, etc....to keep WM and SS seperated??

[Matt D]

Question: If I sign up for the network right before Wrestlemania and pay for the 6 month commitment wouldn't I also get SummerSlam too? If so, why then would I want to renew after the 6 months when the programming has traditionally been bad from SS until RR? Just the content and free PPVs? I wonder if WWE will do something like a 6 month commitment from Feb., 5 month from March, etc....to keep WM and SS seperated??

You really want to watch Legends House?

[Tim Cooke]

This can't be said enough. MLB Advanced Media being behind this will make streaming issues and downtime almost non-existent. I've been an MLB.tv subscriber for years and even during times with shaky internet or older devices, the service always just worked. Highlights for every team are up almost instantly during games with full video packages available for recaps 3-4 hours after the last pitch.

[The Chief]

Sorry if this has been addressed already, been offline the past couple days:

 

Unedited theme music and Jesse commentary is pretty awesome and that sells me on the network alone. I see they're hyping this as "unedited" content, and that's awesome. But I do have some questions on how far they can go with "unedited"

 

Do they blur out old 900 numbers? They do on DVD's.

 

Ted DiBiase shills the USA movie of the week on a 1994 Raw, does that stay in?

 

Do the Burger King, 1-800-COLLECT, etc ads they run stay in? (you know what I mean, those quick ads the announcers run down when they do a wide shot of the inside of the arena in between ring entrances)

 

Those are minor and I could care less if the edit them out, but these are the kinds of things I think about.

 

And what about ECW music? You are paying for this service, so is Metallica going to want a cut for Sandman entrances? I'm fairly knowledgable about DVD royalties but I don't know if streaming services are different. This has me very interested.

[hammerva]

I doubt they are going to start playing original ECW music now. I mean it isn't like the rules for using their music have changed. Besides the music they were using in ECW when it existed was borderline illegal to begin with

[Loss]

I think "unedited" is going to have some caveats. I can't see them airing Bret's profanity-laced promo going into Wrestlemania XIII without any censoring, or some of the nip slips of the divas that have happened on pay-per-view.

[mookeighana]

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."

[The Chief]

I think "unedited" is going to have some caveats. I can't see them airing Bret's profanity-laced promo going into Wrestlemania XIII without any censoring, or some of the nip slips of the divas that have happened on pay-per-view.

Since there's a parental control filter, some of that stuff could possibly stay in. Should be interesting to see once this goes live.

 

A friend and I already took the launch date off from work :-)

[goc]

I am so fucking putting my money down on launch day. This is going to be awesome. And that is coming from a guy who has already burned just about every Raw & Nitro during the Monday Night Wars onto DVDs. But the video quality on that stuff makes it hard for me to really sit down and get a lot of watching done. That's no longer going to be a problem. Really hoping they don't neglect their territory footage either, I would absolutely love for them to upload full years of Mid-South TV.

[bradhindsight]

Mookie - what do you think happens with their Commercial DVD release strategy? They definitely are not leaving that business (although blu-ray releases in North America look to be very limited in 2014) so do you think it's something like a 6-9 month lag on those making their way to the Network?

[anarchistxx]

Probably too much work for them to consider it, but couldn't they have the unedited versions of shows for those who can prove they are of age, along with censored PG copies for the kids with the bad language/nudity/sexual storylines edited out? A lot of their hardcore fanbase idealizes the Attitude Era product as the peak of wrestling, and will want to see those shows in full without the blood, scantily clad females and edgy content missing.

 

Mookie - what do you think happens with their Commercial DVD release strategy?

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.

[mookeighana]

Right, but I am interested to see how many people actually buy the PPV. The low point is like 70 or 80 thousand domestic. Wrestlemania can hover around 1 million. So you are looking at 6 - 60 million in people picking up the channel. over 6 months time. Here are some questions that jdw, mookie, kjh or bix or somebody can answer for me...

 

1. What percentage does WWe get from its current PPV deal?

 

2. Since the first 6 month installment goes through 5 PPVs, how many people need to order this thing just on lost PPV revenue from their cable PPVs, assuming that each subscription bought is a PPV purchaser?

 

3. How many additional non-PPV purchasing subscribers are needed?

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.

[cm funk]

Yeah, there's always going to be hardcores/collectors who just have to own the deluxe blu ray with all the extras.

 

I do think putting their entire home video library up is an admission that it's a slowly dying revenue stream, not that we didn't already know that. I had some gift cards for X-Mas and was surprised how cheap relatively recent deluxe WWE releases were going for. I got Best of IYH, Wargames and Best of Nitro Vol. I all for right around $10 give or take. And you always see WWE DVDs in the bargain bins at retail stores. I know that WWE gets the money upfront for their releases from retailers who then re-sell them at mark-up, but I take this as an indication that retailers are no longer willing to buy their product in substantial quantity.

 

Between that and beginning the slow death of their PPV business they're taking some forward thinking calculated risks, but it will be really interesting to see how it all plays out.

 

Also interesting with the negotiations for TV beginning. They're putting up RAW, SD and ME replays now while under existing contracts with Viacom and Ion, so I don't think that's going to be much of a hangup, for those entities at least. I really think TV is still the bread and butter of their product for the forseeable future, and the network will be used to drive people to the TV product, so I don't think it hurts them, but we'll see

[mookeighana]

Mookie - what do you think happens with their Commercial DVD release strategy? They definitely are not leaving that business (although blu-ray releases in North America look to be very limited in 2014) so do you think it's something like a 6-9 month lag on those making their way to the Network?

Probably too much work for them to consider it, but couldn't they have the unedited versions of shows for those who can prove they are of age, along with censored PG copies for the kids with the bad language/nudity/sexual storylines edited out? A lot of their hardcore fanbase idealizes the Attitude Era product as the peak of wrestling, and will want to see those shows in full without the blood, scantily clad females and edgy content missing.

 

Mookie - what do you think happens with their Commercial DVD release strategy?

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.

[Wolfman]

I am going to be trying this out for sure but I am curious if they will be heavily editing the programming like they do with many of their dvds? That would be a big turn off for me.

[Bix]

I am going to be trying this out for sure but I am curious if they will be heavily editing the programming like they do with many of their dvds? That would be a big turn off for me.

Older programming is pretty much just going to be edited for music rights. Nothing for content, whether it's blood, Benoit, Ventura, etc.

[slackermillionaire]

Probably a non story but on WON Radio they had audio of Dave and Bryan interviewing Austin about the Network. Bryan asked Austin if he would be interested in doing something similar as his podcast on the network, Austin replied his ears would be open. I don't think the WWE has approached Austin about such a thing, but it wouldn't be a bad idea for a show. A weekly hour long in depth of interview of a wrestler could be very interesting. They wouldn't even need to get Austin per say (although I think Austin would strive as a sit down face to face interviewer), I am sure Joey Styles or even Foley (if he took a serious approach to it) could pull it off quite well.

[Bix]

Looks like it will indeed be on AppleTV and they were handcuffed by Apple's weird policies in announcing it, as the reporters there got WWE-branded AppleTVs: http://bytenow.net/2014/01/08/wwe-network-apple-tv/

[David]

On Observer Radio, Dave mentioned that working with MLBAM will be very expensive, and that it means the break-even point for the Network will be higher than you would think it would be. Does anyone have any idea how much something like that will cost?

[mookeighana]

Looks like it will indeed be on AppleTV and they were handcuffed by Apple's weird policies in announcing it, as the reporters there got WWE-branded AppleTVs: http://bytenow.net/2014/01/08/wwe-network-apple-tv/

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.