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WWE Network Experiences Launch Problems

By Daniel B. Kline - Feb 25, 2014 at 1:16PM

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The WWE Network experienced some problems in its first day of existence as fans were unable to register.

If you wanted to sign up for the new World Wrestling Entertainment (WWE 0.98%) Network on Monday -- the day it launched -- you had to be extremely persistent. The sign-up page for the network was down for parts of the day and some people who did manage to access the page were met with errors.

"Major League Baseball Advanced Media, WWE's technology partner, was overwhelmed and their systems have been unable to process most orders since 9 am due to demand for WWE Network. MLBAM has been working aggressively to resolve this issue," according to a statement WWE sent the Fool.

Trying to sign up for the WWE Network

Visits to the signup page for the WWE Network crashed the site repeatedly on the launch day. At 1 p.m. the website (which shows whether a site outage is global or specific to you) showed the page to not be responding.

My attempt to register started at 12:30 p.m. Clicking the Network sign-up button on the the WWE homepage resulted in either nothing happening or error messages. After repeated attempts, I reached the sign-up page and was able to enter my name and address, but the site returned an error when it attempted to process my credit card info. Attempts to pay via PayPal were also unsuccessful.

An attempt to refresh the page resulted in a timeout error, forcing me to start back from the beginning. After numerous tries and failures, I was able to complete my registration at around 1:10 p.m. -- 40 minutes after I started trying.

The site experienced intermittent problems through the afternoon. At 4:50 p.m., WWE used Twitter to announce that  "Major League Baseball Advanced Media's systems are now processing orders for WWE Network at"

The deal WWE is offering

With the network, WWE is attempting to create a revenue stream that both eliminates the uncertainty of pay-per-view revenues and stops the company from having have to share that money with providers, including Dish Network (DISH 1.32%), DirecTV (DTV.DL), Comcast (NASDAQ: CMCSK), and Time Warner (TWX). The WWE Network costs $9.99 a month with a six-month commitment. For that subscribers get all WWE pay per views -- which previously cost between $44.95 and $70 a show, half of which went to the cable or satellite companies.

The network, which also includes an enormous archive of older shows and original programs, is a deal for WWE fans (as even casual fans who would buy two PPVs a year now get a whole lot more for their money). It also locks in a revenue stream as WWE will know how many subscribers it has instead of having to book a PPV show and hope people order it.

On the sign-up sheet WWE also has a pre-clicked box asking whether you want to auto-renew your subscription every six months. If users don't uncheck that box they are subscribers until they manually cancel or their credit card expires.

How big an opportunity?

WWE CFO George Barrios told analysts last week that the network could attract as many as 3 million subscribers and become a "major source of future earnings growth" with as much as $150 million a year in cash flow, Deadline reported. 

According to WWE's most recent annual report, the company took $83.6 million in PPV revenue in 2012.

Will it work for WWE?

First-day glitches aside, the real test for WWE will be seeing if the company gets enough network subscribers to offset the revenue it loses from the dramatic drop it should see in orders for Wrestlemania, its biggest PPV of the year. The show is still being offered via traditional PPV, but companies including Dish Network have said they may not carry it. Last year "WrestleMania broke down as 650,000 domestic (North American, really) buys and 398,000 foreign," Ben Miller of told the Fool via email.

With the network only launching in North America, the international buys won't be affected. WWE does not release an average price paid per PPV buyer. But if you assume Wrestlemania -- which generally has a higher price tag than lesser shows -- costs viewers an average of $55, the show brought in $35,750,000 domestically. The WWE receives about half of that money meaning the company took in roughly $17,875,000 in PPV revenue from the show's North American buys.

And while the WWE Network is not likely to get enough subscribers to offset the lost Wrestlemania money immediately, the company could make it up in the coming months. By forcing customers into a six-month deal WWE may lose on Wrestlemania but it could make more money in months where less-successful PPVs air.

WWE has not released any first-day numbers, but the signs are encouraging.  According to MLBAM, the initial demand at 9 a.m. Eastern exceeded anything the company had seen in its history and overloaded the company's e-commerce processing system, Variety reported.

Fix the glitches

Making sure people can actually sign-up for the network during the period leading up to Wrestlemania is key for WWE. During the pre-Wrestlemania period wrestling not only traditionally has its highest viewership levels, it also has its highest level of attention from casual fans. With WWE pulling out all the stops to get consumers interested (including having legend Hulk Hogan make his return to WWE TV Monday night) this is the critical period to get people who like WWE, but weren't regularly buying PPVs to buy the network.

To make that happen the network has to work. The hardcore fan might be willing to wait or try again later. But if the casual fan tries to subscribe and can't, the opportunity may be lost.

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World Wrestling Entertainment, Inc. Stock Quote
World Wrestling Entertainment, Inc.
$60.91 (0.98%) $0.59
DISH Network Corporation Stock Quote
DISH Network Corporation
$20.78 (1.32%) $0.27
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