Wednesday, March 09, 2016

WWE Business 2016-2017 Survey Results

I put out a survey on Twitter with a few questions about what others thought would be appropriate goals and targets for WWE in 2016-2017.

First question was about "expertise" on WWE business.

I put respondents into three major buckets of respondents as it related their WWE Business "expertise":
  1. HIGH - "I follow WWE Business extremely closely. For instance, I am likely to read their SEC filings, listen to conference calls, check out the KPIs and monitor investor events." (8 people)
  2. MEDIUM - "I follow WWE Business closely. I sometimes listen to WWE conference calls or read reports. I will usually read good articles about WWE business." (14 people)
  3. LOW - "I occasionally follow WWE Business. Once in awhile, I will read articles or coverage of WWE business." (9 people)
While this expertise judgment is completely self-selecting, it's nice to see three large groups emerge so we can compare how they answered the questions, and create "weighted" predictions.

First, I listed fifteen different "priorities" and asked respondents to rank them as business objectives for 2016-2017.


I ended up creating six scores (an average rank in each expertise and and average rank after where I threw out the min/max scores) and weighting the scores to come up with this "final" objective list:
  1. Growing number of paid domestic WWE Network subscribers
  2. Growing number of paid international WWE Network subscribers
  3. Monetization of Digital Media (advertising sales on websites, sales of various broadband & mobile content, YouTube)
  4. Expansion of International Television Rights for core Raw/Smackdown in remaining markets (outisde of major deals signed in 2014-2015)
  5. Expansion of Domestic Television Rights (adding programming such as Tough Enough, Total Divas, NXT, Superstars)
  6. Improving Licensing Revenue (license fees & royalties - video games, toys, apparel)
  7. Growing International Live Event Revenue (core WWE - adjusting dates, ticket prices, tour packages, etc)
  8. Growing revenue generated by NXT brand (touring, merchandise, etc)
  9. Growing Domestic Live Event Revenue (core WWE - adjusting dates, ticket prices, tour packages, etc)
  10. Launching WWE Network in China
  11. Growing WWEShop Revenue
  12. Outside Investment Projects (i.e. TapouT, Phunware, Tout, Marvel Ventures)
  13. Growing Venue Merchandise Revenue
  14. Growing revenue from WWE Studios (investing, producing, distributing filmed entertainment)
  15. Additional Home Entertainment Revenue (home entertainment platforms - DVD, Blu-Ray, subscription outlets)


#1 and #2 Growing WWE Paid Subs

In all three groups of experts, Growing Paid WWE Network Subscriptions both Domestically & Internationally topped the list of priorities. 

Realistically, there's not a lot WWE can do to affect their largest revenue stream (Television Rights) and their Wall Street Cred is pretty much predicated on how many WWE Network subscribers they gain, retain and lose each quarter. 

#3 Digital Media Monetization

This was something that Medium & High Expertise voters thought of highly (rating it #3) while Low Expertise voters put it squarely in the middle (ranking it #7). WWE talks a lot about their social media numbers, but despite impressive YouTube views, the company isn't raking in very much money from this revenue stream. This may be a good example of a topic which hardcore WWE business analysts think a lot about, but more casual observers are less concerned with.

#4 Expansion of Int'l TV Rights

The "high expertise" group rated this topic #5 (elevating Domestic TV Rights to #4) while the "low expertise" rated this topic #3. Medium experts ranked this #4.
WWE largest bundle of Television Rights included US, Canada, Mexico, Thailand, UK, India and UAE. There's still deals outside of that core group, including Italy, Germany, Spain and Japan. Some of those deals are coming up for renewal. There's be well-documented problems with the CTH deal in Thailand (WWE recently secured a default judgment against the broadcaster for non-payment of rights). And of course, WWE is always looking to expand their foothold in China.

#5 Expansion of Domestic TV Rights

Total Divas on E! has been a revenue-generating endeavor for the company which has exposed elements of the WWE product to new viewers (particularly females). This year's Tough Enough outing was not a ratings hit (even with publicity generated by the Hulk Hogan racist remarks) but demonstrated that USA Network still had some appetite for excess WWE programming. With SmackDown moved to USA, it seems unlikely USA is going to expand their wrestling footprint, but it's possible that another NBCU sister network may have some interest. WWE may even find a suitor outside of the Universal family of channels. Of course, while NXT airs on the WWE Network, it does appear on terrestrial television in overseas markets. Likewise, Main Event and Superstars and along with recap shows like Afterburn and Bottom Line still air in other countries. In other words, there is additional programming that could be sold. The question is whether WWE will choose to do this.

There's a real difference of opinions among the three groups. High Expertise ranked this in the top five (#4) while medium expertise put it #6 and low expertise dropped this to #13.

#6 Improve Licensing Revenue

In January, WWE and 2K announced a multi-year extension for the video game licensing. Historically, Q1 is the big quarter for the company. It will be interesting to see whether the Divas revolution or NXT talent will generate any new opportunities for new license agreements. High expertise ranked this #6 and medium expertise ranked this #5. Low expertise dropped this topic to #9. Like Digital Media, this is a quiet revenue stream which can make a big different but isn't as flashy as TV rights or WWE Network subscriber numbers.

#7 Growing International Live Event Revenue

Interesting to see International Live Event Revenue ranked higher than Domestic Live Event Revenue as a priority. This was true with both High (#7 intl/#11 dom.) and Medium expertise groups (#8/ dom/#10 intl). Low expertise groups ranked growing Int'l & Domestic live event revenue as top five priorities (#4 dom and #5 int'l). With the worldwide expansion of the WWE Network, and the exposure of secondary touring brands such as NXT, there are new opportunities for WWE to grow this revenue stream. The WWE Network dynamic also transform the game when it comes to traditional restrictions around holding a PPV or television taping overseas.

#8 Growing NXT Revenue

Honestly, this isn't a separate priority -- it's integrated with television revenue, licensing opportunities, new merchandise lines and touring strategies. Every single WWE conference call has one constant - someone will ask about the NXT brand. Beyond a traditional developmental league, NXT has worldwide exposure. Putting this in the middle of the pack feels right - it's a sexy idea, but it's hard one to execute in a massively financially impactful way. High expertise put this at #8, medium expertise at #11 and low expertise at #6.

#9 Growing Domestic Live Event Revenue

The success of 2015 was extracting more revenue from WWE fans per ticket in both the North American and International markets. Average NA live event attendance has been flat for years, so generating more revenue was a significant success in 2015. While low expertise respondents ranked this #4, both medium & high expertise put this in the bottom third (#10 and #11 respectively).

#10 Launching the WWE Network in China

The ranking for this initiative reflected very different thoughts on the feasibility/opportunity of WWE Network in China. High expertise respondents ranked this #10 while Low & Medium put it higher (#8 and #7). China remains the last major marketplace without access to the WWE Network though the barriers to entry are phenomenally rigid.

#11 Growing WWEShop Revenue

High expertise and Medium expertise respondents both ranked this #9 while low expertise respondents ranked it #12. Utilizing Amazon UK as an European distribution partner. Q4'15 hit record levels for online orders. It will be interesting to see if WWE is able to tie WWE Network profiles to WWEShopping options in the future - providing more seamless data integration options and improved recommendation mechanisms.

#12 Outside Investment Projects

We don't hear a lot about investment projects until either they go bust (and WWE takes a write-off) or WWE starts screaming about TOUT every week on Raw. The exception has been the TapouT joint-venture with ABG. It's a recasting the brand from MMA wear to lifestyle fitness. In the past, investments in companies like Phunware or touring attraction Marvel Ventures, has been buried in financial documents or briefly mentioned on conference calls. TapouT will be a far more visible project which will include utilizing WWE superstars as models. All three expertise groups ranked this initiative similarly - #11 (low), #13 (medium), #12 (high).

#13 Growing Venue Merchandise

WWE actually started a new live event project in 2015 where they allowed fans to order venue merchandise from their phone while at their seat and pick it up on their way of out of the arena. While high expertise fans saw a little more potential in this revenue stream (#10 rank), this initiative was #12 and #13 for medium/low expertise respondents. It may surprise a casual observer that Venue Merchandise generated over $22 million in revenue in 2015 which was more than traditional PPV, digital Media, Home Entertainment or WWE Studios.

#14 Growing WWE Studios Revenue

After a decade of projects from producing, distributing, co-financing and partnering, WWE Studios (formerly WWE Films) has remained a separate division on WWE's books. There have been shifts in strategy to move low-budget, low-investment, distribution-centric models. In 2015, WWE began their new partnership with Warner Bros and has continued to leverage their brands (Scooy Doo, Flintstones) for kid-friendly WWE movies. However, the positive ROI on most projects has been minimal outside of made-for-TV fare. WWE has yet to integrate their film catalog with their over-the-top streaming network. Overall, WWE Studios was ranked as a last or second-last priority by all three categories of expert respondents.

#15 Additional Home Entertainment Revenue

While there may still be some demand for Home Entertainment, especially rare content in collector formats, the overall trajectory for WWE Home Entertainment has been downwards-sloping for five years. The core unit is still DVDs - not BluRays, and the combination of the WWE Network on-demand availability and the lack of untapped directions have contributed to a stagnant sector. Similar to WWE Studios, Home Entertainment ranked last or second-to-last in each of the groups.


The next question looked at WWE Network characteristics and offered voters the option of rating each high (score 2.0), medium (score 1.0) or low (score 0.0).

Overall, the top five initiatives were:

  1. Adding back catalog content to the WWE Network Library
  2. Additional tierary Live Event specials (Beast in the East, King of the Ring, Roadblock)
  3. Enhanced Searching Options
  4. Cutting down on simultaneous users
  5. Expanded external WWE Network awareness/advertising campaigns
These rankings were generally similar among the high expertise respondents - Cutting down on simultaneous users, other live events (outside of PPVs), expanding WWE Network awareness/advertising, enhancing search options and adding back catalog all had scores at 1.4 or higher. 

Medium expertise respondents were only passionate about adding back catalog and enhancing the search options. Low expertise respondents felt strongly about other live events and back catalog. 

Daily Live Content & WWE Films on the WWE Network were supported more by "high expertise" respondents than other groups. NXT Programming expansion was not a popular option among any group. The high expertise group felt very strongly about reducing number of simultaneous users - no doubt a measure they believed would spurn additional account signups from the free-loaders.


The question was, "How many subscribers will WWE announce the day after WrestleMania?"

Respondents were given the option of choosing "paid subscribers" and/or "total subscribers (including free)". WWE announced in early March that new subscribers would be able to watch WrestleMania for free as part of their free month trial. These numbers were collected after this promotion was announced and should reflect that information in their estimates.

Paid Subscriber Number
Average: 1,379,264
Median: 1,416,500
Min: 1,000,000
Max: 1,600,000

High Expertise Avg: 1,422,167
Medium Expertise Avg: 1,379,403
Low Expertise Avg: 1,250,000

Paid Subscriber day after WM - Weighted judgment: 1,378,038

Total Subscriber Number
Average: 1,697,012
Median: 1,684,000
Min: 1,400,000
Max: 2,150,000

High Expertise Avg: 1,705,500
Medium Expertise Avg: 1,705,025
Low Expertise Avg: 1,670,800

Total Subscriber day after WM - Weighted judgment: 1,677,913

For perspective, here is the "paid subscriber" numbers for the past 8 quarters:

paid subscribers
as of qtr end
paid subs.
paid subs.
avg paid subs
over quarter
  940,000   277,000    1,237,000

On April 7, 2014, WWE announced they had 667,287 subscribers.

We do not know the exact number of subscribers for WrestleMania 31, but it's interesting to note that in the week between 3/31/14 and 4/7/14, WWE had added over 172,000 "domestic" subscribers.


Lastly, I had asked respondents on their opinion on the question, "Should WWE continue offering free 1-month subscriptions to new users?"

Answers were predominately split into two groups:

  • "Yes - but only in months outside of blockbuster events such as WrestleMania, Royal Rumble or Summer Slam." - 18 votes
  • "Yes - they are a streaming service like Netflix or Hulu or HBO Go. It's part of the industry model." - 10 votes
The "Not Blockbuster" group was 85% of the high expertise group, 50% of the medium expertise group and 67% of the low expertise group. 

I suspect, but don't know for sure, that age may also have played a role in the response to this question. 

Looking at home country for respondents, 6 out of 7 "high expertise" respondents chose "outside of blockbuster months" - included "did not identify country", European and North American voters. Among "medium expertise", the vote was split 6-6 with North Americans going 50/50, Europeans going 75% "not blockbuster" and "did not identify country" voting 2-0 for "industry model". In low expertise, the vote was 6-3 in favor of Blockbuster but North Americans were 1-1 split, Europeans were 2-0 for "outside blockbuster" and "did not identify country" (East Timor?) chose 3-2 for "outside Blockbuster".


For those interested in seeing the raw data used in this survey, please see my Google document.

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