Why Isn't the WWE Network Working?

I confess, I enjoy World Wrestling Entertainment (NYSE: WWE  ) . And if you're here, you probably like it too. You have to admire the passion the company instills in its fan base, who turn out in droves to watch their favorite Superstars do their thing. 

These folks will pay up for T-shirts, hats, championship belts, and beer, just to get more from their experience. With over 350 million fans, the trending announcements on Twitter, and a seemingly endless supply of new and original content, at $9.99 per month, the WWE Network should be a no-brainer.

So why isn't it? Why have only 670,000 taken the plunge? The content is solid, the popularity is there: So where are the subs?

Source: YCharts.

Have we seen this before?
For some perspective, let's look at Netflix (NASDAQ: NFLX  ) . It you watch the broadcasts, the WWE network claims to be like Netflix only better. While that may be, the numbers don't support that claim. Netflix has a member base of over 48 million -- that's 72 times more than the WWE Network by its last count.

And that's OK. Netflix is a dominant force that has disrupted one industry and is working on disrupting another. But when it first started, it had a similar subscriber count as the WWE Network. Fast forward 10 years and Netflix has grown to more than $1 billion in quarterly streaming revenue.

Now, I'm not saying the WWE Network will grow up to be a Netflix-type juggernaut. But I am saying the precedent is there, the content is a great value, and there are enough fans to push the WWE Network way past where it is right now. For those interested in the rise of Netflix, perhaps you might find World Wrestling Entertainment interesting.

It's bigger than you think
World Wrestling Entertainment is popular ... strike that, it's very popular. From its recent investor presentation; it has the number 1 cable program, 350 million social media followers, is in 150+ countries, and has 2.6 billion YouTube views. All that adds up to a top 10 social media brand, according to the Dachis Group Social Business Index.

According to Nielson Media Research, average prime time views totaled 4.6 million for its flagship show Monday Night Raw. For perspective that was double the amount that watched ESPN. And its content is rich -- the company executes over 300 live events per year, it has 130,000 hours in its library, and it adds 500 hours or original programming to its lineup per year. If content is king, World Wrestling Entertainment produces plenty of it.

Source: wikicommons.

According to a recent WWE investor presentation, there are 116 million TV watching homes in the U.S. and 54 million of them don't care about the product. Well, that means that 53% or 62 million homes have some sort of love for sports entertainment. WWE estimates that 13 million are passionate about the company. 

By last count the Network has 670,000 subscribers, so its growth potential is significant. Let's say a portion of its 13 million passionate fans eventually buy the Network. Management has stated that it needs 1.3 million to 1.4 million subscribers to break even. That means it needs to double its current count, or harvest just 10% of its passionate fan base, to make up for what it's losing in its pay per view business. Anything more than that, and we're talking about some serious outperformance.

Counterpoint
Judging by the recent collapse of the stock, many believe that the WWE Network will never make money. Those same pundits probably think the acting is equal to a bunch of bad one-liners from a Michael Bay movie. They also complain that the action is staged. And frankly, I would have to say they're mostly right.

Except for Dwayne "The Rock" Johnson, the performers are not great actors and the dialogue can get a bit goofy. But one thing the WWE does very well is put on a good show. Fans are aware that everything is bologna, yet they gobble the stuff up anyway. WWE no longer hides the fact that it is an entertainment company. 

Once you get past that, you can start to appreciate the performances. It is 100% original and the WWE is the only one who does it well. Other wrestling organizations pale in comparison. The UFC is considered by many to be a sport, which makes it more of a threat to boxing than an entertainment company. 

Foolish final words
So with all these data points, I think the only reason why the WWE Network isn't working is that it's only been around for a few months. I believe it needs time to push its platform. Time to work out the kinks, time to tap into just 10% of that passionate fan base.

With time, I think the WWE Network will be a major success. There are too many fans, there is too much content, and the value is just too good for it to fail. Ultimately, Vince McMahon may be thought of as a pioneer. If successful, the WWE may be the first of many companies that create a network so that customers can buy what they want, when they want.

Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 


Read/Post Comments (19) | Recommend This Article (21)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 05, 2014, at 8:12 AM, joeriederer wrote:

    You must be really out there saying The WWE is the only wrestling company that does it well. That is a statement that WWE blind sheep followers make. I suppose WWE is better because they have more people in the crowd? Idiotic comments like that is why I do not take you WWE fans seriously. I no most of you have never even been in a wrestling ring so how would you know what good Wrestling is? The past 3 months the best show on television has been TNA impact. That is the show for the adults. WWE is a great company, for children to watch, that's it. WWE is the reason pro wrestling lost over 5 million viewers, they have become really lame, corny, and childish. No thanks. TNA is the best wrestling show, easy. These guys can wrestle unlike the rest hold WWE slow style. It dawned on me years ago with the WWE marks. If you guys actually wrestled and new what good wrestling was then you would love TNA. You guys most only watch wrestling for the soap opera corny crap. That is all WWE is better than TNA at. The soap opera aspect. So you people must be more concerned with bad acting than good wrestling.

  • Report this Comment On July 05, 2014, at 5:45 PM, snowman69 wrote:

    This answer is simple, most information you can get off the wwe.com, plus you can go on youtube, and watch any match you want for FREE. so why pay a rediculos price of $10 dollars every month when you can get it for FREE every Day.

  • Report this Comment On July 06, 2014, at 1:51 AM, Nostaljack wrote:

    For the guy above that likes TNA, glad you do. With the exception of the stupid six-sided ring, they're basically aping what WWE does. Daniel Bryan as champ? Cool, we have bearded Eric Young! Let's make him champ! Authority storyline? Cool, Dixie! Let's get her involved. How about MVP. We'll turn him heel and give him a stable...and he'll be an authority. Zzzzzz. Everything on TNA TV is WWE redux. You can't even claim TNA's ring work is better because that's not true anymore. In short, TNA won't even be on the air in five years. They're having trouble re-upping as of now. LOL!

    As for getting WWE Networks content for free, you forgot one thing: Pay-Per-Views. They're basically throwing them in and you aren't getting those from YouTube. You also aren't getting their original programming. Even the shows that are on YouTube aren't always of great quality.

  • Report this Comment On July 06, 2014, at 6:57 AM, SuntanIronMan wrote:

    "Why have only 670,000 taken the plunge?"

    670,000 and one. Just signed up. :)

    Welcome to Raw is Jericho!

  • Report this Comment On July 06, 2014, at 7:53 AM, ice884 wrote:

    If TNA is so great why is they had a stadium with a show and less than 300 people showed up for it? A Stadium which seats thousdands of people...TNA is not that great of a show, I think most of the stories suck ass, which is why TNA has never been able to keep my attention for more than a few weeks at a time, even with all the great stars they have. WWE is no longer what it once was. The WWE network is probably failing because they don't have half the content on there people would expect them to have. When there was wwe on demand one of my favorite things was the monday night wars. That was when the show was at it's best and the business at it's best. Where are the monday night wars on the wwe network? No where and half the stuff on there I honestly don't really even care about and I am willing to bet that is why only a about 2/3's of a million people signed up for it. After the 6 month you had to agree to keep it, I bet the subs will drop. That network is why wwe had investors pull out and lose so much money, along with having to change networks again. The only thing that I would get the network for if I ever do is to watch all pay per views for free.

  • Report this Comment On July 06, 2014, at 9:24 AM, psychosiz wrote:

    I, like many fans, enjoy wrestling. This includes WWE and TNA. Right now both have decent story lines and are interesting to an extent. The WWE right is a bit predictable but I think every wrestling organization goes through that to some extent. So I am a wrestling fan, why don't I have the WWE network? Simple, money, time and access. Everything on the WWE network I have seen or will see in the future. Why pay for something I can get for free? Why put my money there, when its better spent in other ways? My point is this, unless you are an absolute die hard fan, the WWE network is not appealing. I have a few friends who are diehard fans and they both have the WWE network. One of them is already considering canceling for the reasons I mentioned above. My point is not criticize the WWE or any other wrestling organizations, but rather to give some insight into why the WWE network is not appealing.

    The WWE investors were promised huge numbers and thus far they haven't met half of where they supposed to be. Investors are generally not fans, they want financial results. If I was an investor I would be furious with the WWE for being misled and have to deal with this situation. Now I am hoping to break even rather than making a profit and this is not good. Remember the WWE sold them on 1.5-2 million, with at least 1 million by now. The subscriptions are moving much slower than what the WWE promised after the slow start as well and this is another issue that further compounds this issue

  • Report this Comment On July 06, 2014, at 10:30 AM, trfkah wrote:

    The reason why WWE does not have the buy rate as they predicted is the contend that they are pushing, you can find on the internet for free. The PPV for the most part had the same people buying them.

    As far as TNA, there is a reason why Universal Studio's did not hold the space for them to come back. TNA does not draw people to their product.

  • Report this Comment On July 06, 2014, at 10:58 AM, Sevenpenny wrote:

    The problem with why the WWE Network is doing gangbusters is partly do to their pricing tier. Sure they can claim it is 9.99/month until their blue in the face, it isn't, not when you have to drop 60 bucks all at once. The core audience of the "E" really cannot afford to do that and make ends meet. Now if they redid their tier to include a monthly option they would have more people signing up....

    I had signed up for their "free" period and I don't know if they held stuff back over the free period or what they had at the time was just crap, however it certainly was not worth 60 dollars at that time. They said that they would have the Attitude Era and the Monday Night Wars and all but maybe a handful of shows from that time were available...

    Another problem is that they are still competing with Youtube. I would think many are of the opinion why should we be forced to pay for something when we can just eventually hop on youtube and watch it for free?

  • Report this Comment On July 06, 2014, at 11:12 AM, OldJim51 wrote:

    The biggest reason for the WWE Network low numbers is the fact that the old web sources (smart TVs and DVD players) can't accept the app download. Most devices less than 2 years old have no problem with the addition, Buying a device can be cheap ($40) but most fans would rather have the paraphernalia the WWE pushes.

  • Report this Comment On July 06, 2014, at 1:01 PM, acrowfoot wrote:

    I didn't pay $60 when I signed up, also I signed up right before Wrestle Mania and thought it was a scam at first. But, to my disbelief I get $10.47 deducted out of my account once a month. No big deal. Much better than paying $69.99 to watch 1 HD PPV each month. WWE should be more aggressive with people putting stuff on YouTube. It is copyrighted material and isn't allowed on YouTube unless WWE itself puts it up there. The only compliant I have is that the WWE app on our PS3 doesn't look as good as the WWE app when we watch on Roku. The Roku has a much better picture. I do wish they would create an app for our WD Live media player.

  • Report this Comment On July 06, 2014, at 2:53 PM, RawNitro wrote:

    All of you are WRONG!!! The reason the WWE network isn't getting subscribers is because the shows are REALLY BAD!

    I've seen 1 good RAW in the last 10 years. Smackdown hasn't been any good in 5 years. The writers and storylines are AWFUL!

    All the wrestling talent they have and never use. The roster is LOADED and we see the same wrestlers over and over.

    We are tired of HHH, Steph, Cena, and Orton hogging up the spot light with the same boring routine!

    Why are Adam Rose, Bo Dallas, and Fandango being pushed every week? These guys suck. No way these guys would be on the Monday night wars rosters. All the talent they have to push on the roster and they push these awful characters?

    WE WANT TO SEE... Bad News Barrett, Big E, Big Show, The Wyatt Family, Brock Lesnar, Cesaro, Chris Jericho, CM Punk, Damien Sandow, Daniel Bryan, Dean Ambrose, Dolph Ziggler, Goldust, Jack Swagger, The Uso's, Kane, Mark Henry, The Miz, Rob Van Dam, Roman Reigns, Rusev, Ryback, Seth Rollins, Sheamus, Stardust, The Undertaker, Xavier Woods... every week.

    I watch every week hoping for things to get better. It has its moments, but, usually, I'm disappointed every week. If they want fans, like me, who grew up with WWF, WCW, and the Monday night wars, to sign up... they better push out a better product.

  • Report this Comment On July 06, 2014, at 3:19 PM, edmar316 wrote:

    You want the real answer, It's working and working great when 3 or 4 people split the bill and each one uses the same code to get in. My buddy has it and 3 of his friends all split the cost and they all watch it on seperate devices. So if your monitoring only one code then you have only one user but if 4 people are using it then you have more people watching then what is registered. Great idea WWE.

  • Report this Comment On July 06, 2014, at 4:49 PM, lovettstough wrote:

    The WWE is not giving its' fan base the WWE Universe what it wants at all in any way shape or form. Nobody wanted to see AJ LEE come back the crowds didn't get into her match at all on Monday Night Raw or Friday Night SmackDown! The crowds were not into here at all!

  • Report this Comment On July 06, 2014, at 5:43 PM, Death215 wrote:

    I think the few things that can fix the WWE Network in my experience with the network are...

    1. They need Monday night raw and WCW Nitro. The content so far is Ehh

    2. They need a better search. I do searches and too many times i get nothing back.

    3. They need more original content like legends house. Not a million top list.

    4. Real LIVE and Behind the scenes shows. Showing before and after Raw and PPVs events, Just like with the ufc showing guys getting ready and showing them after matches would be a great experience for us fan. None scripted, just raw behind the scene footage.

    Those 4 would make me stick around.

  • Report this Comment On July 06, 2014, at 8:31 PM, jesus954 wrote:

    This is a great topic, when the wwe network idea was announced i was a little skeptic. We really didnt know what this network would end up being.

    Now we know that the network is basically access to wwe's vault of history. Not only that but all ppvs for free for $10 a month.The wwe networks true value doesnt lie on their reality shows, or even their immense vault of matches. But in my eyes, it the true benefit lies within their free ppvs.

    Without the wwe network, fans would have to fork out an average of $45-50 a month to enjoy each single ppv. I havent heard much about wwe losing ppv revenue, so who are these people? Why are ppv paying fans still rather fork out 40-60 dollars for one single ppv? Even if these fans only want to see the 3 big ppvs they will be paying $30 more than they would with the wwe network deal. From a logical point of view, if your paying for 3 ppvs, this means your a decent wwe fans correct? $10 for even wwes worse ppv should be considered a bargain!

    Until wwe figures out a way to target their ppv audience with their wwe networks deal, i see little progress being made. My theory is that these ppv buyers are simply parents of kids that want to see a ppv once in a blue moon. Not fans but parents, i would like to assume that any wwe fan would be bright enough to understand that it actually is $10 a month for each ppv.

    The wwe network to me seemed like an attack directly aimed at online streamers. I think wwe went a little to far by calling it a network. Like most know, we can access any match we want thru many online sources. Should also be said that no one really cares much about their reality shows...(legends house? wtf is that). Wwe just threw money out the window with extras. I think a better strategy would have been for them to simply have people sign in to their website offering some sort of yearly membership. In which you can pay one whole fee for all ppvs for a year, or sign in for 2 years paying $10 a month. Like a cellphone plan, just more straight forward.

    With that simply approach, they would target their audience based solely on ppv savings. Which is what the wwe network really is for. It would get ppv viewers to switch, and make fans that never pay for ppvs actually think about it and sign in.

    If the goal is to make money, a simple ppv package deal would be millions of dollars cheaper than setting up all of this network expenses just so people dont actually use it.

    Wwe content has gotten better thanks to the injection of new talent. Im not sure what else they could add to their network in order for more people to join but from my stand point, their ppv value is what makes it worth it.

  • Report this Comment On July 06, 2014, at 9:26 PM, ecoll39638 wrote:

    The reason is two-fold and simple. Number 1. The WWE targets children. Yes I know many fans are adults but far more are children. They do not have the funds to subscribe nor will mommy and daddy pay unless they are fans as well. Number 2. Everything today is a monthly fee. Look at everything you pay monthly for and you will see it adds up to close to a mortgage payment. Think about your Netflix, cell phone, cable/internet bill, monthly utilities, car payment, insurance, food bill, and everything else you pay for monthly. If the WWE were smart they would offer this service to be cable outlets for $6-$7 a month and let the cable companies charge $9.99. People will be more willing to pay it as an add on to an existing service and have another monthly bill.

  • Report this Comment On July 06, 2014, at 10:44 PM, tissueboy76 wrote:

    I have be a WWE Network subscriber since inception. I think its a great value and have enjoyed the PPV and the legends house. I do believe that the network has to add some "orginal" programming such as legend's house. I think for the most part they have done a good job to date. I also think that anyone who say the Network is a failure or a success at this point is short sided. This vision will take a little time and it needs refinement. As far as people saying that why should i pay for something i can get for free on youtube. I would say this: nothing is free and the WWE needs to pay the bills and make a profit or it will cease to exist. If you believe in the product then support it otherwise you are just stealing. Lastly, if you are a "cord cutter", Think of the implications beyond wrestling that the Network has. Im sure the Big networks are keeping an eye on this.

  • Report this Comment On July 07, 2014, at 8:52 AM, chuckzito wrote:

    The WWE network is working, but will not work for this simple reason. The age demographic for wrestling is teenager to 20 something's. Guess what these people do not have. That's right, money. Guess what these people are, though. That's right, internet savvy. I am sure any kid knows how or where to get free mp3's or movies. Same thing goes here. Any young kid w/half a brain knows that all they need is 1 parent or friend to by the WWE network and they call all watch it under diff devices and under 1 username. From the kids I have asked, It seems that the younger users have multiple people on their accounts, while people in their 20's usually only have 1 or 2. Netflix has tried to be vigilant about having multiple people using the same account and so does the WWE. The could easily be at the 1.4m break even threshold right now if people weren't sharing their accounts. Vinny Mac came up w/a genius groundbreaking idea, he just didn't realize the technology loophole. He had the same predicament back in the 90's when there were black box cable boxes that got all PPV's for free. I'm sure the WWE saw a spike in PPv's in the 2000's when cable went digital and black boxes became obsolete. Now he was probably getting 90% of his buy rates on cable & satellite as oppose to prob 60% b4 because people knew how to steal it. It can still be done now, but much more difficult in the digital era. So Vinny Mac, if you're reading this, I know you love $ and it's killing you that you are not a billionaire any more, crack down on the multiple users and you will see your subscriber base double.

  • Report this Comment On July 07, 2014, at 5:08 PM, RawNitro wrote:

    From the comments I can see the problem...

    1. People are sharing codes.

    2. People can find WWE stuff for free online.

    3. People, like me, don't think the product is worth the money.

    I'd fork out the cash if the WWE gave us fans what we want. Even though RAW and Smackdown are free. I still feel like I'm being ripped off at the end of each episode.

    I stream the PPVs for free. The lagging sucks! I tolerate the irritating lag because I'm not paying for the garbage that HHH, Steph and the awful writers are pushing out every week.

    I have money. I pay 200 bucks to see the WWE live when they come to my town. Every time I watch wrestling I'm motivated by hope. Hope of seeing wrestling as it once was.

    I think millions of fans got hooked on wresting when it was awesome every week and keep hoping that it will return to the glory days and pass it down to their kids, like I did with my kids.

    The ratings lie. WWE thinks its pushing out a good product and the revenue/ratings reflect that. When in actuality, the product has it's moments, is mostly garbage and people keep hoping it gets better.

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