Tuesday, November 22, 2016

Will the WWE Network hit 2 million paid subscribers in 2017?

Some are speculating that rolling out lower-priced tablet-only/AVOD-supported WWE Network tiers will be the pathway for the WWE Network to hit 2,000,000 paid subscribers by the end of the 2017.

Here's some things to consider:

What does 2 million subscriber mean if they have to continue to erode the per subscriber OIBDA to achieve it?
Right now, the OIBDA on the Network segment is 20% ($27.5M OIBDA on $137.2M in revenue.)

Keep in mind that includes $10m of PPV revenue for Jan-September 2016. PPV, even with the majority of it international PPV, is still at a much higher OIBDA % than the Network %. The pure Network OIBDA % is certainly lower than 20% - I'd guess closer to 18%. That would imply that $5 subscriptions would only be generating 9% OIBDA.

Yes, WWE will tout that they're going to be leveraging ad-supported video on demand, but let's be realistic -- they haven't been breaking out their YouTube revenue or their AVOD revenue because it's paltry.

What does WWE's own 2017 outlook suggest?

WWE's 2017 outlook (published as part of the Q3'16 results) noted that "level of WWE Network subscribers will continue to increase, albeit at a lower rate, on a year-over-year basis."

If 2016 is going to end around 1.4 million (that's a range of 1.372m to 1.428m), we're comparing to a 12/31/15 base of 1,217,100 paid subscribers. That's a growth of between 155k and 211k subscribers in 2016.

That gives 2017 a ceiling of 1.64m if you're using growth of absolute subs.

If you're using % growth, that's a growth of 13% to 17%. That still lands us at the same range of ceiling for 2017 - around 1.6m paid subscribers. Either way, you're still 400k short of 2 million subscriber (80% to target).

I think it's very optimistic to guess that WWE will hit 2 million subscribers in 2017 when their own internal outlook if very, very short of that.


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