Shares of World Wrestling Entertainment (NYSE:WWE) were hammered after the company released subscriber data for its new online video channel. The numbers came in lower than expected, and as a result the stock was down more than 30% over the week. Before that, shares had almost doubled on a year-to-date basis because investors were excited about the company's online venture. Most know WWE as the integrated media company, but investors are encouraged by the company's changing business model.

What is WWE?
Over the last few months, the hottest media technology stock has not been the video giants, such as Google or, but WWE. The company's shares have jumped an impressive 220% in the last year. It initially unveiled plans for its own streaming app in January. In the past it has generated revenue from deals with TV companies, such as Comcast (NASDAQ:CMCSA), and pay-per-view events such as WrestleMania 30. WrestleMania is the WWE equivalent of football's Super Bowl. 

WWE's latest innovation
The launch of the WWE Network in February was a move to generate more revenue through monthly subscriptions, which include all WWE events (most notably WrestleMania). The service is $9.99 a month, with a six-month commitment. It allows subscribers to access WWE's streaming online programming.

It is a bold innovation since it will no longer be exclusively tied to cable TV (though it may antagonize some cable TV companies) by shifting its programming to online video. WWE has made the clever move of not only offering the programming through its own website but also through apps that run on a variety of devices such as Apple TV and the Microsoft Xbox. In other words, WWE is betting that fans would rather pay a monthly subscription than occasional one-off charges.

WWE also has a movie studio, launched in 2002, that has grown revenue 37% in 2013, but it is still a small part of the overall business. But the impressive 37% growth was achieved by diversifying beyond action movies starring wrestlers. Its most popular movie last year was The Call, a thriller that starred Halle Berry.

WWE is is also expanding its international presence. Revenue from Asia, Europe, and Latin America grew by 12% in the fourth quarter year over year compared to flat revenue in North America. In fact, more than 20% of its revenue during this quarter was generated outside of North America. It also has several reality shows that go well with its wrestling content.

WWE Network update
More than one million households watched WrestleMania 30 earlier this month. That was a record number, and as a result the company has even more confidence that it can hit its 1 million WWE Network subscribers goal by year-end.

The company released the first subscription numbers for the WWE Network, which may have been a tad bit disappointing but indicate that it is on the right track. Forty two days after the launch, the network had 667,287 subscribers. The Wrestling Observer, a respected professional wrestling newsletter, said that it would reckon 650,000 to be a failure and that any number below 850,000 wasn't that great. The break-even number according to the company was 1 million subscribers, and 2 million subscribers would completely transform the business.

What should be cause for concern is that the subscription included access to WrestleMania XXX but includes a six-month commitment at $9.99 per month. It would cost a viewer about the same as the six-month commitment to buy a pay-per-view for WrestleMania alone.

However, there are some grounds for optimism, especially if the company makes its service available to viewers in Canada and possibly eliminates the six-month commitment. In fact, the subscriber sign ups thus far are impressive when you consider the relatively small fan base for wrestling. Potential customers currently lack the ability to watch the network on a conventional TV set, but this problem should resolve itself as a partnership base is expanded.

On the other hand, after the announcement DISH Network (NASDAQ:DISH) decided to stop offering WWE pay-per-view programs. But DISH Network is still offering WWE programming via USA and Syfy. DIRECTV will still offer WWE pay-per-view events, but has noted it may stop in the future.

These two satellite providers already have enough to worry about, including fending off the likes of Netflix. But together, they could likely fend off competition a bit easier. Of course there are antitrust issues that might prevent DISH Network and DIRECTV from merging.

However, in recent news, DISH Network's CEO has approached DIRECTV CEO about merging. They attempted to merge back in 2001, but the Federal Communications Commission rejected the notion. That said, with Comcast trying to buy Time Warner Cable the industry is getting smaller, and the move would help DISH Network-DIRECTV compete with a Comcast-Time Warner giant. A combined DISH Network-DIRECTV would have 34 million subscribers, above the combined Comcast-Time Warner Cable subscriber count of 29 million.

How shares stack up
WWE is trading at a P/E that's slightly less than 18 based on next year's earnings expectations. It also has negligible debt. Meanwhile, Comcast trades at a P/E of 16 and DISH Network at 28. However, both have much more debt than WWE. On the other hand, WWE offers investors the highest dividend yield of the three at 2.2%. Comcast offers a 1.8% dividend yield, and DISH Network doesn't pay a dividend.

Bottom line
Netflix has blazed a trail for how we watch TV, but WWE is looking to blaze its own path. Its WWE Network is tempting even casual watchers to become subscribers instead of paying for the occasional pay-per-view. Moreover, given the nature of the subscriber model, there is no competition for its network. For investors looking for a solid investment that blends sports entertainment and media, WWE is worth a closer look.

Marshall Hargrave has no position in any stocks mentioned. 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.