3 Reasons the WWE Network Will Fail

Last month's launch of the WWE Network has generated a ton of buzz. Supporters think that by cutting out the TV middlemen, World Wrestling Entertainment's  (NYSE: WWE  ) new streaming video channel will usher in a new era of sports viewing. I, however, believe the service will ultimately fail. Here's why.

1. A version of it has flopped before
The WWE Network has three main components: All 12 annual WWE pay-per-view (PPV) events, original reality shows and documentaries, and an on-demand library with over 1,500 hours of archived footage. Regarding the latter, WWE already packaged on-demand content on its now-defunct WWE 24/7 channel. The last reported worldwide subscriber numbers totaled just 115,000. 

As Sean O'Leary wrote recently, the PPV component is attractive to many wrestling enthusiasts, but as for the archived footage, "the casual fan will likely have no interest." Limited viewership of WWE 24/7 has already proven that.

2. The numbers just don't add up
How many subscribers does the WWE Network need? Most sources cite somewhere near 1 million as a break even, something the company told Variety in January. As fellow Fool Daniel Kline points out, WWE made a little over $83 million from PPV revenues in 2012. He writes, "if we assume ... $7.50 [net] per customer per month ... at 1 million customers, the company will be taking in $90 million a year," surpassing the break even point. 
 
Unfortunately for WWE, the numbers just don't add up. WrestlingObserver's Ben Miller told the Fool last week that the company's premier PPV event, WrestleMania, had 650,000 domestic purchases in 2013. Including international buys, this number rises to 1.05 million. If the 100,000 or so hardcore fans interested in on-demand content also buy WrestleMania -- a reasonable assumption -- the only way the WWE Network can break even is if 95% of all remaining buyers sign up for the streaming service. 
 
Because the network isn't launching outside of North America until at least this winter, hitting the 1 million mark anytime in 2014 will be next to impossible unless there are more signups than there were WrestleMania purchases last year. For an event widely dubbed the "Super Bowl of Wrestling," this doesn't make sense. In no sport do regular season events and archived footage draw more eyeballs than the championship. 
 

WWE Wrestlemania 28, via Simon Q, Flickr. 

Of course, there are those -- including my colleague, Dan Kline, who is writing the counterpoint to this piece -- who will argue that with 4 million Twitter followers and 16 million Facebook likes, WWE's total audience is much larger. They'll probably also mention that many fans pitch in to buy WrestleMania together, and I don't deny that. But the simple fact remains: For the WWE Network to be successful, it will have to convince nearly everyone who typically pays to watch its "Super Bowl" to adopt it.
 
Will some fans watch it on their smartphone, tablet, Roku, Xbox, or PlayStation? Sure, but others, who prefer wrestling on a regular television, won't. Even if smart TVs can access the network -- something WWE says should occur this summer --  only one-third of all flat screen TVs shipped last year had smart capabilities, according to Strategy Analytics. Most likely, the network will capture its most dedicated fans, and some mainstream users who have the proper technology. But beyond that, I have a tough time seeing an immediate future where subscribers total seven figures. 

3. Another hurdle remains
There's one more issue that could derail the network: technical problems. As Ringside Chicago reports, "server overloads, streaming issues, missing pay per views, censored content, and log-in issues have been just a few of the hiccups that subscribers have had to deal with." WWE issued a statement last week, saying they're working "aggressively" on a fix, but as of this writing, complaints continue to file in.

WWE's decision to launch the network in the weeks leading up to WrestleMania 30, on April 6, is a smart one, but it could backfire. If outages affect any portion of next month's event, some fans could permanently lose faith. Ditching TV for streaming video makes sense if it's cheaper, but connectivity problems might cause this advantage to evaporate.

Final thoughts
Professional wrestling is still one of the most popular sports in America, and after nearly three years of waiting, WWE's new network is finally here. As a streaming video service, its aim is ambitious, but ultimately flawed.

WWE 24/7 already proved the average fan doesn't care about on-demand archived footage, no matter how many thousands of hours are offered. And unless the company can unveil a reality show that's significantly more entertaining (and able to draw better ratings) than "Legends House" or "Tough Enough," I doubt many will jump in solely for the original programming either.

That leaves the network reliant on signups related to its 12 annual PPV events, including WrestleMania. The company's most watched event is in a little over a month, and if technical issues affect its first-ever broadcast on the WWE Network, public sentiment could turn negative quickly.

Even if these problems are fixed in time, it will only break even if the company convinces almost every WrestleMania buyer to jump on board. That's certainly a possibility, but ultimately a long shot considering the network is limited to users who want to watch wrestling on technology beyond a traditional TV.

To read Dan's take on why the WWE Network will actually be a winner, click here.


Read/Post Comments (20) | Recommend This Article (9)

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  • Report this Comment On March 04, 2014, at 9:42 AM, kauer426 wrote:

    writer of this article has no clue.ROKU first off works on any flat panel tv.WWE NETWORK in less then a week has over 1 million paid subscribers.DUDE you really need to check your facts before writing the article you look like a FOOL.You have no idea what the average WWE fan thinks.You have to be a complete moron if your any kind of fan not sign up for WWE NETWORK the PPV included with the subscription is a smoking deal you get all 12 which has a value of $590.00 yrly which you get for 9.99 a month or 120 bucks for all 12 PPV.

  • Report this Comment On March 04, 2014, at 10:17 AM, mcFoolish wrote:

    Writer is missing the point. WWE will not be available on traditional delivery methods, and on that one point, he is correct. He would also be correct however in saying that people will not ride a horse to work.

    The excitement for the WWE network is beyond just wrestling. It is the new way to get programming/content. With a roku box, or a chromecast device, or (fill in any number of devices that already or will exist), you can view content on your large screen display. Content providers are sick and tired of traditional. I could see the weather channel buying 10,000 wwe subscriptions, just to help it along, so that later the weather channel can do the same (remember weather channel was dropped by directv).

    The buzz around the wwe network is 10% wrestling, 90% new paradigm in content delivery.

    And even as just wrestling, as this writer seems to think, one cannot simply look at wrestlemania numbers. Wrestlemania is expensive. And who knows how many do not buy it because of the price. But, this drops that price to almost nothing. I for one never even considered buying a PPV, but am considering the wwe network.

    But, that said, I still think the bigger piece here is the new paradigm, that wrestling is the medium is just side note.

  • Report this Comment On March 04, 2014, at 10:25 AM, Trodore wrote:

    If they contiune to have the problems they are having, I see many of their customer's dropping them after the six months are up. I have a playstation, Xbox, Wii U, Computer, and Tablets.

    This worked on the Playstaion as far as logging in went, but you could not get anything to start up and watch without massive lag.

    The Xbox still does not work.

    And they do not have the last Elimination Chamber or Raws and Smack downs on there.

    What happend to the full legnth shows? I see the PPV, but no Raw, Smack Down, or the old Nitro and Thunder shows.

    I have paided my first month, so they will have me for six months. But if this is the best they will give me, I may not keep it.

  • Report this Comment On March 04, 2014, at 10:50 AM, scruffymatt wrote:

    There is one big fault in this line of reasoning, Jake, price. Wrestlemania by itself is $60. All other PPVs are $45. WWE Network is $10 a month. So a hardcore WWE fan would spend $555 a year on PPVs. With the Network it becomes $120. That's a big savings and a big reason to subscribe let alone the reality shows, backstage shows and legacy archives. Even if fans like my group of friends only order the big 4 PPVs, that would still be a $70 savings every year. My problem with the Network isn't the value or content, my problem is with the WWE's superstar/story-lines, but that is another article.

  • Report this Comment On March 04, 2014, at 10:54 AM, mobrocket wrote:

    This whole time I thought u had to plug your xbox, ps, or roku into your regular TV to view the picture

    Even more so, the Roku is easier to use than most cable / satellite boxes

  • Report this Comment On March 04, 2014, at 12:37 PM, scottyp180 wrote:

    There are more than a few counter arguments to be made in response to this article. For one the author makes it seem like the yearly revenue will be based soley on the network; however there are still going to be plenty of fans, especially in locations where the network is yet to be available, that will still purchase monthly PPVs. The article even mentions that the network won't be available in certain areas until the end of the year which actually HELPs the wwe, not hurt. These people will HAVE to pay for PPVs in order to watch them.

    I would also argue that the archive footage is a reason people will purchase the Network. When I heard the Network offered EVERY PPV ever my eye lit up. I have to imagine that a lot of fans, likely older fans or ones who do not follow much of the current WWE, will be willing to dish out $10 a month to watch some of the old footage; although the real question is will these fans continue to pay month after month and year to year. It is also important to note that it is not just WWF/WWE footage, there is also WCW, ECW, as well as some footage for WCCW. WCW and ECW have fan bases all on there own that will have an interest in the network.

    The ease of access is another objection to the "version that flopped" argument. I can access my account nearly where ever and when ever I want. MY phone, my playstations, my xbox, any laptop or computer, as well as select tablets (with more options being available over time). WWE 24/7 did not have those options, did not offer as much (again any PPV EVER), and I do not believe the cost was as affordable (I thought I saw $40 a month but that could be wrong).

    Lastly the technical problems, which I think is the biggest concern, has already been improving. Last week I was barely able to watch the first match of a ppv and this week I was able to not only watch a ppv beginning to end if I wanted but I was able to skip ahead and fast forward. Sure there were times where the stream would need to load and buffer but that is expected with a streaming service, especially one that is a week old. Im sure the netflix streaming service wasn't running flawlessly when it first came out.

  • Report this Comment On March 04, 2014, at 1:42 PM, krichardsinbox wrote:

    This article has a lot of incorrect information and it's kind of disappointing that a site so reputable would post this article.

    First of all the 24/7 service was nothing like what the network is. There was a very limited amount of content that was available at the same price of the network. The two services can't really be compared.

    The price point of the network is excellent. The pay per view model netted WWE less than $20 per buy - the rest went to the cable company. If you think about 3 people buying and watching together, if those three subscribe to the network (which why wouldn't they honestly) they are already increasing their profit per person.

    Their traditional pay per view business will decrease, but there will still be people who can't stream the video due to living in a rural area, etc. In these cases they will still be able to sell events individually.

    There are technical issues but they will get better as the network continues. By the time the 6 months are up things should be settled quite well.

    There are some valid points in the article but they aren't really that well thought out and it's pretty obvious that the writer isn't a WWE watcher and didn't do his homework.

  • Report this Comment On March 04, 2014, at 2:51 PM, Cyclonus wrote:

    Will both Smackdown and Raw be added to the network? Since both of their contracts will be up soon. And how can they make any money off this. Since they will be losing money from the PPVs alone. They charge 60 bucks for Wrestlemania alone.

  • Report this Comment On March 04, 2014, at 3:18 PM, bendriver wrote:

    Why pay for it when you can just watch the next WWE event after a PPV show? The next public WWE event will show all of the highlights and title changes.

    PS WWE became a heap of garbage now-a-days...It all started with them changing the name to WWE from WWF. After that there was more solo wrestler compared to more people being in fractions and other little teams.

  • Report this Comment On March 04, 2014, at 4:28 PM, pkallday wrote:

    I'm inclined to agree that the WWE Network will fail, for all the reasons you've pointed out. I personally feel if they made the bold move to move Raw and Smackdown exclusively to the network and only kept their weekend wrap up show available on regular access stations it might give them an edge since they still are the premiere stable. However, If the Network were specifically for the PPV's and other original content, and leave the 24 hr access of archived content to the website, this would be more interesting me.

  • Report this Comment On March 04, 2014, at 9:27 PM, Lamarley wrote:

    As for the server issues, they predicted that 1 million people would sign up in the first month. 3 million have signed up already. That's going to stress any system.

    You don't think casual fans would be interested in archives that feature Hogan, The Rock and Steve Austin in their primes? Agree to disagree there.

    The WWE Network is awesome and getting better by the day.

  • Report this Comment On March 05, 2014, at 1:12 AM, 5000watts wrote:

    This article doesn't consider several things.

    While tablets and phones are one way to get the material, it is far from the only way if you don't have a smart TV. If you want to watch it on your TV you can do it with a Xbox 360 (46 million in the US), a PS3 (26 million in the US), or a PS4 (3 million in the US).

    While I don't know how much WWE 24/7 was, the WWE Network is ten bucks a month. Also, I don't need cable or satellite to get it, all I need is an internet connection. Between this, Netflix, and Hulu I have no reason to use cable anymore. Granted, I can't watch Raw live anymore but I usually have to be at work by 5:30 so staying up to watch it isn't always an option if I'm not on vacation anyway.

    Wrestlemania is over $60 all at once. The WWE network is $120 broken down over 12 months. People feel more comfortable paying for something in installments than all at once, so they can more easily deal with what is less than two extra value meals a month.

    The biggest issue they have right now are technical issues but they are working on it. Nothing comes out perfectly right out of the gate when it comes to something like this. NXT Arrival was horrible in terms of technical difficulties but the recent live episode of Main Event played without any issues so it looks like they have most, if all of the bugs resolved.

  • Report this Comment On March 06, 2014, at 8:01 AM, krod212 wrote:

    No WAY IN HELL! can you say that nobody wants the 24/7 vault content on the WWE Network, not only getting to relive some of the greatest matches in history that you might of got to see, or unfortunately only saw the highlights of because you dident agree with paying for the asking price of modern day ppvs, you can finally go back and see the entire epic match. Not to mention the WCW and RAW's from the past, we are talking about a big time in Wrestling; The Monday night Wars. Back when we didn't have DVRS! idk about you all but i know i missed a lot from both shows trying to switch back and fourth, even having a brother who would watch the opposite program and we would just fill each other in on what happened at the end of the night.

    P.S everyone asking about recent Raws' and smackdowns and the last PPV(Elimination Chamber): all Raws' and Smackdowns', PPVs will not be available till 30 days after the original air date.

  • Report this Comment On March 06, 2014, at 3:56 PM, DaveinSoCal wrote:

    I like how the argument about the SmartTV is pointed out... Guess the author forgot about people that connect their Laptop's or PC's to their TV via HDMI cable.

    Even when streaming for free online, all I would do is hookup the laptop and TV together through a an HDMI port I was not using and watch the PPV on my flatscreen.

    Personally, with the exception of the XFL Vince has always succeeded in his venture's. I don't see why the WWE Network would fail.

  • Report this Comment On March 06, 2014, at 4:41 PM, DaveinSoCal wrote:

    @Bendriver, they had to change the name because they were being sued by the World Wildlife Fund for the acronym WWF. WWE was originally WWWF (World Wide Wrestling Federation) when Vince bought the company from his dad, he shortened the name to the World Wrestling Federation (hence WWF)

  • Report this Comment On March 09, 2014, at 11:31 PM, Zexaal wrote:

    So....comparing WWE Network, which is available on the internet and a wealth of devices to WWE 24/7 which was only on a handful of providers and was a premium channel.

    Yeah....I think that wipes out credibility for the rest of this article....sorry.

  • Report this Comment On March 17, 2014, at 12:37 PM, Bailey4 wrote:

    Ok, for starters, the author cannot "Do the Math" because he's neglecting the income from PPV sales outside the US until WWE Network goes global. 1 PPV sale can equal 6-7 monthly North American Subscribers.

    About the service and content, this is new & a breakthrough. WWE has been televised for decades, so there's a TON of content to be added to their database. This equals TONS of IT hours to get it done! So here's their IT dept layout: 1 part maintenance, 1 part troubleshooting, 1 part uploading to the database, and then there's the specialized internal troubleshooting when the database needs to be expanded (because it will), and finding a faster link to getting live events next day load & eventually live stream into the database. Too many people take for granted what it takes to create & maintain networks such as Netflix, Hulu+, & the WWE Network.

  • Report this Comment On March 23, 2014, at 4:44 PM, foxbarking wrote:

    The biggest problem with this article is that the writer makes too many assumptions that he is not qualified to make. This is a prime example of why college professors teach their students how to do research; it keeps them from submitting an unsupported argument.

    The first point claims that the WWE Network will fail because it has been done before and failed. The referenced WWE 24/7, however, is not remotely the same thing. Not all cable providers offered the channel for one. Second, there was access to an extremely limited amount of video. Third, WWE 24/7 was not anchored by the WWE pay per views. Fouth, WWE 24/7 did not offer the interactive second screen component that the network offers. Therefore they not the same thing.

    The second point claims that the numbers do not add up for the network to be profitable. The writer does not have the correct information to make such a claim. WWE had been developing this product for years and had a lot more qualified people than this writer crunching the numbers. It is ludicrous to think that the many professionals working on this network were less capable than this writer in figuring the numbers out. That is comparable to some conspiracy nut claiming the moon landing was fake because he knows better than the several hundred scientists who worked on it for years. WWE knows a bit more about the numbers and spent more than the few hours this writer spent putting it together. They have their entire business model on the line, they are more aware of the numbers than you.

  • Report this Comment On March 23, 2014, at 4:52 PM, foxbarking wrote:

    @Daveinsocal That is incorrect. When Vince shortened WWWF to WWF, he immediately worked out an agreement with World Wildlife Fund to use the acronym. The World Wildlife Fund accused Vince of violating the deal in a period of time in the 1990's. The name of the company was changed and only the videos during the disputed time were edited.

    The relationship with World Wildlife Fund existed fro. The very start and there was never a dispute as to who owned the acronym.. it was always owned by World Wildlife Fund.

  • Report this Comment On April 16, 2014, at 12:39 AM, rmp1980 wrote:

    well im in the uk, i was a subscriber of 24/7 but because it was only on the internet and at the time i only had a pc in my bedroom i didnt use it that much because i didnt wanna be stuck upstairs all the time so i cancelled the subscription, but soon as this becomes available in uk i will be paying for this, ppvs, shows, docs etc, and with the multi platform, its a no brainer, the world has changed, with an app like netflix it makes it so much easier that 24/7 was, with the massive library it makes it intresting to the younger generation as well as like myself likes the classic stuff, and like someone said earlier im sure wwe have worked their numbers out.... i just think 24/7 was a little ahead of its time

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