While a more traditional channel could ensure a certain level of distribution, McMahon, chairman of WWE, said in an interview that the terms pay-TV distributors wanted in return for carrying a WWE channel were "too restrictive." McMahon said WWE had deals ready to go with major distributors for a network that would have generated fees of 20 cents per month, per subscriber."I said, much to the chagrin of my staff, I’m not going to sign it," McMahon said.
There's two major sources for information on the WWE network: what WWE releases in their SEC regulatory filings and investor presentations, and what WWE says in major conference calls and at major events.
As Dave Meltzer has pointed out, the million subscriber "break-even" point is directly from the WWE filings. They've been quoting that number for months, and even when the network seemed to evolve from a premium channel on MVODs to a over-the-top streaming network, they remained at one million subscribers. (Their CFO specifically talked about how even though it was a different method, the math worked out similarly, which surprised some of us doing the back-of-the-envelope game, but suggests how expensive the infrastructure and startup costs must be under this scenario.)
When I wrote my first piece about the viability of the Network, I went through and tried to find every article and mention that had been recorded about the network. See: http://indeedwrestling.blogspot.com/2013/11/can-wwe-network-succeed.html
Things you notice:
1. Every mention of the Network into 2013 was about it being a cable network.
2. WWE wanted 40M homes for 2012 but had none signed up come WM.
3. Vince has long postured that any delays in launching the network were on their end. Whether there is some truth to this or just posturing, it's hard to say but when you look at the fact they specifically earmarked bonus/incentive money in 2012 to get a network launched, and they still couldn't do it.
A real telling moment was last month when the CFO spoke at the UBS conference. See: http://indeedwrestling.blogspot.com/2013/12/wwe-chief-strategy-and-financial.html
He's in front of media professions so he can't bullshit them the same way you can with newspapers and magazines. Those networks were there as speakers.
What does he say?
George Barrios: "And the pushback continues. I want to be fair to -- you are having this commercial discussion, everybody wants what everybody wants and sometimes you can’t agree on what is fair terms. I don't want to mischaracterize the other side in the discussion. What I will say is I have not understood and still do not understand why the pay-per-view transition to a subscription service delivered by the MVPDs did not make sense, I still don't understand it."
That doesn't sound like networks beating down the door.
They didn't want to change from getting half of fifty to half+ of ten.
Barrios also admits that they didn't think the Netflix model was viable until very recently.
And that brings me to the next point, the challenge that I've written about for WWE hitting a million domestic subscribers is that by their own admission they have a older base of viewers that hasn't even subscribing to services like Netflix. I run through all of the numbers here: http://indeedwrestling.blogspot.com/2013/12/streaming-statistics-by-age-group.html
When you see that 75% of US adults have access to cable or satellite and only a quarter have access Netflix streaming, you can tell that it's not as simple as assuming that your TV viewing audience instantly equals your Network purchasing audience. I'm just surprised that they think they can go from converting 1/20 of the raw audience thats buying an expensive PPV into 1/4 that will buy the network (setting aside my whole premise that one million fans does not equals one million subscription households).
What's tough is that everyone is that it's really hard to think across age, demographic and social strata when you're contemplating adoption of something like this. I always had cable TV so I keep it, but I never watch football. It astounds me that there are people who live with only Netflix. But they do, and as I dive into the weird world of Harris polls and Nielsen statistics! I learn a lot about how others consume media.
I love the a Network idea, and have been astonished at people from far reaches giving it praise. My non-fan buddy sent me this article and said he was thinking about getting it so he could host a WM party this year. That's impressive buzz and gives me hope.
[quote]To try to get across just how big—and how good—a deal the WWE Network is, here's a brief description of it denuded of the word "wrestling." In its place, swap in anything you love; sports, genres, individual channels, animals that think they're people. Your niche.
Here's a streaming network that offers a 30 year back catalog of [THING YOU LOVE]. Add in free access to live [THING YOU LOVE] events that normally cost in the neighborhood of $45 a pop and happen roughly once a month. On top of that, toss in some goofy original content about [THING YOU LOVE], every reality show format you can think of, reframed to specifically target [THING YOU LOVE] in a way that feels like a fever dream of access and delight. You can access this network on nearly any device that you own, perpetually just a few clicks away from [THING YOU LOVE] streaming in 720p.
And it costs ten bucks a month.
But that's only one segment and I don't know there's a enough people in that segment to reach a million domestically. I said 425k. Maybe the first six months will be higher : 700-800k possibly, by SummerSlam, but I can't see them ending the year 2014 at a million domestic, McMahon swagger aside.
As for the mythical channel, perhaps Vince is talking about when they were looking for someone to take G4 (UFC was rumored interested until the fox deal skyrocketed them).