Monday, March 05, 2018

George Barrios at Morgan Stanley Technology, Media & Telecom Conference (2/28/18)

2/28/18: George Barrios at Morgan Stanley Technology, Media & Telecom Conference
(He sounds tired.)

(0-5 minutes)
George Barrios, co-President WWE
MS: “More and more people are following the company/stock.”
1. Global Appeal
2. Tiering across Content
3. Data Powerhouse

1. Global Appeal of the Brand
70% of consumption of video happens outside of the US

2. We have configured a unique content strategy
We tier across three platforms - we don't replicate across the platforms. In the bundle (pay TV), Facebook/owned-operated AVOD, WWE Network. They're windows.
Tiering our content across the different ecosystems.

3. Was a legacy media company, transitioning to digital direct & social. On a journey to become a data powerhouse. We're developing a deeper & much more informed relationship with our fans.

MS: Focus for 2018?
A lot of the work we'll do this year is the reap the benefits from the previous year's works.
a) We'll continue to invest in data, product, technology stack. It'll affect the
b) Localize more content.
c) Build our brand bigger outside the US - build our talent pipeline.
d) We're going to put more and more people around the world.

We expect to announce our "distribution plans" for three major markets (India, UK, US).

(5 minutes-10 minutes)MS: What can tell us to think about the Rights opportunities?

GB’s Bear Case: Pay-TV ecosystem is going through some level of consumption. Buyers for content are managing themselves through that. Our content has been undervalued (long history) compared to other content. Disruption.

GB’s Bull Case: We’ve worked very hard to reposition the value of the content in the marketplace. Anchoring is a “very significant cognitive bias.” We are positioning as digital, social powerhouse (that may been to strong of a word) but we’re viewed as leaders. The disruption is beneficial to the content rights holders.

MS: Being undervalued historically?

Measure success by how much time we’ve been able to drive - with content. Let’s add up all of the hours and see what the market is paying for those hours. NFL is #1. NBA and WWE are going back and forth for #2 and #3 on Cable.

MS: What are the other things you’re thinking about for positioning and distributing content?

As an IP rights holder. Ultimately, the market will help us decide whether we have do exclusivity.

MS: Guidance for 2018. Adjusted OIBDA goals.

A lot of work internally trying to rationalize the opportunities. Consumption of video content out of the US (70%) with India as #1. That’s fertile ground. There’s a lot of investment opportunity. We’re not in the mode to pull back. We have a business model that allows us to invest and grow adjusted OIBDA.

More local. More video content. More data, product.

(10 minutes-15 minutes)MS: International Rights renewals versus Domestic? Options available to you?

The approach & thinking is the same. Industry structure & Market dynamics are different. Where the content sits. For example, UK we’re “tiered up on Sky Sports”. For us as we go into these things you do similar benchmarking around the world as we talked about in the US. Some markets we think there’s opportunity, others we think we’re fairly well priced - obviously we always want another deal. The level of distribution we’re getting - are we reaching all our fans that we want to? We have to balance all of that. The approach & the thinking and the mental model is very similar, but the specifics are different market-by-market.

MS: Market like India you’re in an interesting spot, a good one, as Sony lost a big piece of content to Star in the IPL (Cricket)?
We sit with Sony now. They’re recent partners. We were on with Zee, Sony bought the Ten Sports and bought the network - we’ve been with Sony now for about a year. Good start to the partnership. Obviously, if you aggregate the viewer hours, when you do that math, India is our largest market - not per capita, but in total. We are categorized as sports in totality during the year, we don’t have a season, so we’re 52 weeks, and if you add it up during the year, it’s Cricket, it’s us, it’s Kabaddi and it’s a fairly big drop-off after that. We’ve been able to “put smiles on a lot of faces there.” Hopefully that harbors well for us.

MS: Let’s talk about the WWE Network. That subscriber growth moderated last year. You talked about 3-4 million? Do you think that’s still the right number? What are you doing to drive acceleration?
We continue to do research, consumer research, customer stats - we think over the long arc of time, the 3-4 million feels right. We looked at a lot of subscription business - not a lot of data - but 8-9 years getting to steady state, and we’re about four years in.

We’re a lot smarter today. WE’re getting smart to reach out to fans and bring them in. We hope we can bring them in on the acquisition side. We can bend the curve back up.

The bigger opportunity for us to the languages, right now it’s an English. Localizing in at least one other language. Localizing around price & currency.

We’ve done a lot of work around what a tiered product could look like - premium tier and integrating our free content. YouTube. DotCom. Creating a different environment for the free content which leads you more seamlessly into the paid content.
In the short term, we’re getting smarter and smarter every day so hopefully that helps on the growth side.

(15 minutes-19 minutes)
MS: Leveraging data and understanding your customer base and the marketing opportunity?

It’s happening. The company is fundamentally different operationally than four years ago. We have tens of thousands of data points among those ten-plus million user accounts. Today when we launched the Network, we sent out one Marketing message. Last week we sent out “a hundred”. My guess is that in a few years, we’ll be sending out a thousand. Algorithmically and at scale. This is not hard work. Sounds like a black box. All you’re doing is Aggregating, uploading, cleansing, and standardizing data. It takes time but not conceptually difficult. It gets back to the investment level.

My boss will ask me from time-to-time, we need to move faster.
We double the people. We build at a faster.
We’re trying to moderate at that.
Creating more content
Localizing more content
Recruiting more talent
Have our cake and eat it too. Make the investments so we can reap the benefits in the future but today deliver improving results. We can do both without one harming the other.

MS: Continuing on the path of Digital. Heard from FaceBook talking about Watch. You are one of their earlier partners on the premium side of the content . What’s your experience with Mixed Match Challenge? 

It’s good.

MS: Where do you take this product? What have you learned so far?

Watch is Facebook’s strategy for Lean-back video consumption. We think that’s great. We think that’s terrific.

20 billion views. WWE is the largest sports video platform in the world. We’re #1 on YouTube. So if anyone is doing anything on video and sports, we get a call. Mixed Match Challenge came from that.

Creating video for a different platform like that, especially live video. New format.

It also informs our creative team and reimagining our core live.

Mixed Match Challenge itself, not a lot of benchmarks to compare to, but we’ve definitely seen increased watch time per video on FaceBook which is really important for us. The FaceBook team seems really, really happy. It’s been a good test for us.

MS: You announced you were going to recut your segments for reporting, ten down to something more manageable. What was the initiative or drive behind that? Do you think it’ll help us understand the drivers of the business?
Definitely. It also reflects how the company manages the business. Really today the distinction between TV, Network, Digital is somewhat interesting, what really matters though for us is we’re creating content and there’s multiple ways to monetize - subscriptions, license fees, there’s advertising. We’ll give a little bit more granularity into those. From a cost side, all the costs are produced as content. Fundamentally there’s no difference to produce this piece of content versus that piece of content. They monetize it differently. We think it’ll be a simpler, clearer way to look into the business for investors.

(19 minutes-21 minutes)
Q&A

Audience: “I had a question on succession issues with Vince McMahon and what the public comments are on that?”
Uh yeah, what we’ve said is, “The board reviews the succession plan.” There’s one in place. Obviously I’m personally not privy to it. They’re very thoughtful about that. Vince has said multiple times this is probably broadest and deepest management bench that company has ever had - a combination of people who been with WWE for a long time and really have it going through their blood as well as people from different industry, technology, other media, that have come in.

Audience: “Just when you think about the US renewal, how important is it to keep same partner - NBCU - do you think there could be other parties being interested like technology players? Is there the ability to split up Raw & Smackdown?
Yeah, so, the first thing I’ll say is that NBCU has been a great mutual partnership for many, many years. We work really, really together with them. To be with them that lock.

Having said that, ultimately the evaluation we’ll look at is at the platform in:
1. Deeping engagement with our fans
2. Bring in new fans
3. Monetize for us.
That’s our evaluation criteria. We’ll be very dispassionate about how we look at those.

Certainly while it’s been rumored for a long time, it’s a rumor no longer, some of the largest digital platforms are seeing value in live sports and their pocketbook - they’re putting their money where their mouth is around that - and we have a large presence in digital today.

We’re evaluated through those three prisms, I’ve mentioned.

Audience: “I’m a die-hard New England Patriots fan. Is Rob Gronkowski going to come to the WWE?”
I don’t know. I’m a die-hard WWE fan. I hope he does.

I’m a die-hard WWE fan.

(21 minutes-28 minutes)
Audience: Common owner for US/UK rights? (Comcast/Sky)

We put the dates out that we think the dates.

Different distribution strategy

Can’t saying anything else about that.

How would it affect our rights? I don’t know. That’s really a question for them.

Our deals are Co-terminous. Several years ago there was some discussion about whether there would be players that want global exclusive rights.

Audience: Ronda Rousey signed? Should we thinking about that impact of that to the business?

I’ll answer that question. The context is interesting. It really is our women’s revolution. When we think about three years ago, we had WWE Superstars and WWE DIvas. People saw the change of the female talent in NXT. There was this hashtag that went global, #givedivasachance - we don’t like how you’re structuring female wrestlers in a storyline. I think there was about three days of that trending globally. I think Vince came on and said, “We hear you. Keep watching”.

Divas’ moniker is retired. For the first time ever, we had women headlining major PPV events.
We can measure it. We can see time spent.
Within that context, we think Ronda is is super talent. Super cool. She is all in. She’s all in.

My daughters know who Ronda Rousey is. It’s exciting.

We’ll see where it takes us.

MS: Advertising. How is it viewed by advertisers today? Buying groups behind the content?

What we see is more on the digital side? We’re moving that inventory through YouTube.

Smaller number. But today it’s no longer a small part of the business.

We have less visibility to USA. USA has been public. They said they have added 200 new advertisers from last years.

They have broken several new categories. They’ve been very public about their success. It’s a win-win.

It feels like it’s been a real positive story with us.

MS: There’s a lot of focus around advertisers around brands. Do you advertisers view WWE as family-friend and want to be associated it?
There’s very little content that’s PG. If you’re looking for family friendly content.

We’ve very high on co-viewing stats,.

This whole digital-social transformation that changed the narrative of the brand, both from a B2B and B2C perspective.

I think all of that has created a positive context.

(transcript by @mookieghana)

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