‘Wrestlemania 30’ -- How Far WWE Has Come

With 'Wrestlemania 30' coming up this weekend and the WWE Network thriving, it's important to look at how WWE has changed the traditional business model in ways few others could even imagine.

Apr 4, 2014 at 8:08AM

Say what you want about Vince McMahon but you have to give the man credit for what's he accomplished. He's a successful visionary and part of that is because he knows how to take risks. Of course not all of those have paid off, but he's won more bets than he's lost. Sunday night will be the 30th anniversary of his crowning achievement, Wrestlemania, and like him it has changed the very fabric of sports and entertainment.

The grandest stage

Wrestlemania

(Credit: WWE)

Professional wrestling has come a long way from its early days. You can call it a male soap opera or sports entertainment, but the fact remains it's a multi-million-dollar business. At the helm of the most successful brand in the industry is McMahon, who along with his wife, Linda, and children, Shane and Stephanie, have secured a legacy like no other.

Every week World Wrestling Entertainment (NYSE:WWE) hits the airwaves with a unique mix of athleticism and action. McMahon and his team craft storylines with their talent (known as "Superstars" and "Divas") that blend through a series of programs both on air and online and is traditionally capped off with a monthly pay-per-view extravaganza. The biggest of those events is Wrestlemania and more goes into it than one may think.

Wrestlemania's timing is as tactical and precise as the execution of one of its matches. Strategically placed on the Sunday between the final games in the annual NCAA "March Madness" college basketball tournament, the spectacle's only real competition is ESPN's Sunday night baseball game of the week. It's out of the way of the Olympics, football, and other top-tier sporting events.

Aired in over 160 countries and simulcast in more than 30 languages, WWE makes sure it's accessible to any fan who wants to see what has become known as both "the grandest stage in sports entertainment" and "the granddaddy of them all."

Pop culture presence

It's one thing to craft a card of matches with interesting storylines fueling the feuds, but McMahon took it a step further and integrated a pop culture tilt to the festivities. Teaming with the iconic Hulk Hogan in Wrestlemania's debut main event back in 1985 was The A-Team's Mr. T and the match was rounded out with other well-known celebs: Muhammad Ali (guest referee), Liberace (guest timekeeper), and Billy Martin (guest ring announcer). It defied all expectations.

It also took place in Madison Square Garden, not only the world's most famous venue, but also WWE's unofficial home. Both Vince McMahon and his father Vince McMahon Sr. are now enshrined in MSG's Hall of Fame and the arena shares a special history with Wrestlemania, having hosted the first, 10th, and 20th editions of the annual event.

In the years since, pro athletes like Floyd "Money" Mayweather and entertainment personalities like Maria Menounos have kept the tradition alive by competing in matches and larger-than-life sports icons Pete Rose and Mike Tyson have also put their stamp on the festivities. In addition the event's featured performances from musicians (and WWE fans) such as Snoop Dog, Flo Rida, and Kid Rock and consistently draws top celebrities in the crowd.

The WWE Network

Wrestlemania

(Credit: WWE)

This year the event will serve a dual purpose. Aside from the annual pomp and circumstance that comes with being WWE's marquee event, Wrestlemania 30 will be the official coming-out party for the just-launched WWE Network.

For years McMahon has talked about launching a network much in the same way as Major League Baseball and the National Football League, but there were complications. Would audiences pay to watch something they had been getting for free? McMahon knew there had to be an incentive and reruns of past WWE events mixed with new compilation clip shows weren't going to be enough.

Over the last few years WWE has become one of social media's biggest advocates. Facebook and Twitter has been heavily incorporated into its programming and storylines as well as Tout, which the company also bought a large stake in as a personal investment. Realizing how successful that integration has become McMahon and his team realized the solution was right there in front of them...a streaming network.

Programmed like a traditional network, but backed by a full archive of always available events from pro wrestling's past and present, the WWE Network would be a unique hybrid. For just $9.99 a month (with a six-month commitment), wrestling fans were given unprecedented access at a reasonable price.

Yet what was equally groundbreaking was WWE is including all 12 of its annual pay-per-views at no extra cost. Instead of paying between $45 and $65 a month, it would now be all-inclusive and more easily accessible.

Game-changing impact

Wrestlemania

(Credit: WWE)

Many analysts still think McMahon and WWE are crazy for shaking up its business strategy, but in actuality they are geniuses. WWE executives recognized the traditional cable model is changing and eventually it wouldn't be able to support itself in the same way it had for decades. The rise of Netflix, Hulu Plus, and Amazon Prime showed there was a market for streaming content, but only if that content was not overpriced and presented some added value to the consumer. By offering its PPVs as part of the monthly fee WWE was able to tackle both touch points in one move.

The truth is on average WWE fans only bought between two and three PPVs a year (with Wrestlemania usually being one). By charging about $10 a month and factoring in both the six-month mandate and by playing the odds fans would automatically choose to renew for the full year, that's an annual draw of about $120 month per user, which helps offset the cost lost by abandoning the pricier model.

However what many doubters also failed to realize is that WWE programming is only half the equation. WWE has a massively successful line of consumer products ranging from branded T-shirts, hats, and replica title belts to DVDs, CDs and video games. Even if they sacrificed some of the PPV revenue, they stood to make it up in other areas, including not just those lines of branded goods but also in live event sales.

All of a sudden the company was being exposed to additional audiences and drawing extra revenue from people that previously balked at the monthly PPV model. Now at a cheaper price point, the opportunity for greater immersion among both individuals and households increased as well.

Wrestlemania was the WWE's first big PPV extravaganza and fittingly it will also be the first PPV event to stream live on the network. While that's good news for fans, it's troubling for cable/satellite providers who are still reliant on the old business model. Dish Network even threatened to stop carrying the events, but eventually pulled back and said they would take them on a case-by-case basis. Translation...they knew they were leaving money on the table.

Still many have debated if ultimately the WWE Network can be successful, and it will be a while until we know for sure Bst thanks to the innovations of Vince McMahon and Wrestlemania, it certainly has a larger-than-life chance of coming out on top.

Your cable company is scared, but you can get rich

So how do you profit off this changing of the guard? There's $2.2 trillion out there to be had and currently cable grabs a big piece of it. That won't last. And when cable falters, a number of companies are poised to benefit. Click here to learn more.

 

Brett Gold has no position in any stocks mentioned although he has worked with WWE on various projects. As of this writing, he has no professional arrangements with the company and these views are entirely his own. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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