On Thursday’s WWE investors conference call, Vince McMahon revealed the company is in talks with major stream service providers to sell the rights to major events such as WrestleMania. McMahon cited the potential deal as “transformative” as distributing more content to “the majors” could increase company revenue. It would also cannibalize the WWE Network.
WWE hit record revenue numbers in 2019, which is due to the large television contracts they signed for Raw, SmackDown, NXT and Saudi Arabia. However, network subscriptions, live event attendance, television ratings, and consumer products continue to decline.
The reason 1.42 million people (worldwide) currently subscribe to the WWE Network is because of the low price point for pay-per-view events. If they end up on another service such as Amazon Prime, the network essentially becomes a digital archive with a docuseries here and there.
In other words, subscriptions will plummet.
UFC is having great success with their pay-per-view events streaming exclusively on ESPN+. Connor McGregor vs. Cowboy Cerrone drew one million pay-per-view buys at $59.99 a pop. UFC Fight Pass is the world’s largest digital MMA library, which also airs live events from regional and international promotions along with grappling and kickboxing cards.
WWE might have seen UFC’s success and are looking to replicate it.
There is a big difference, however, between the two promotions. UFC never used Fight Pass as the exclusive provider for their premium content. UFC heavily relied on traditional pay-per-view until they signed with ESPN last year.
WWE, on the other hand, dissolved their pay-per-view market share by giving fans the option of paying $9.99 on the network instead of forking over $49.95 to their cable provider. The lower price point has been the norm for six years.
Popularity in WWE is low. Now, they want to reset the market to increase revenue? Asking people to pay more for a dull product while changing the way they consume said product is not conducive to a successful endeavor.
Streaming companies are overpaying for content right now. WWE is smart to take advantage of the trend. However, that bubble could burst, on them, sooner than later. According to Variety, Fox reported their 2019 4th quarter earnings took a hit due to SmackDown underperforming on Friday nights.
Fox is paying WWE $205 million a year for SmackDown. According to the Wrestling Observer, Fox wants a 1.0 rating in the 18-49 demographic, and right now, that number is not even close.
If Fox is already blaming WWE for their lower earnings, only four months into a five-year deal, other networks might take heed. This could hinder WWE’s progress in selling the rights to its marquee events.
The big four, WrestleMania, Royal Rumble, SummerSlam, and Survivor Series are WWE’s most valuable events. Money in the Bank could be in the conversation, but the rest are not only considered B shows by fans but are treated as such by the company.
If I’m Netflix, I’m not paying a dime for Extreme Rules or Super Showdown.
WWE is facing a precipice at the doorstep change. Such a seismic shift in content consumption will make the company a lot of money in the short term. However, if WrestleMania is going to cost more money on another streaming service, the quality of the content needs to improve.
WWE only has the bandwidth to increase the quantity of their content, not the quality. If this trend continues, these deals will not pay off long term. Right now, the odds are not in their favor.
Ringside Logic 