CALDWELL'S TAKE CORNER CUBE WEDNESDAY 8/6 - WWE has tough questions to answer on international expansion Aug 6, 2008 - 11:28:01 AM

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Updated daily from the corner cubicle, Torch columnist James Caldwell's weekday blog focuses on hot topic current events and other items of interest from around wrestling.

Updated Wednesday, August 6

I'll have a full break down of WWE's quarterly earnings report in this week's Torch Newsletter, but I wanted to share thoughts on the international scene based on WWE's hard numbers and commentary from executives in yesterday's conference call.

The theme of this quarter's earnings report was international expansion and where the next frontier is. Even the subject of "global expansion" was brought up during the conference call, which prompted Linda McMahon to provide the company's two-to-three-year plan.

WWE isn't committed to adding separate brands overseas, but they believe the demand will eventually be there to either export a group of WWE stars on a regular basis or start-up a completely new brand to go with Raw, Smackdown, and ECW.

WWE: China, WWE: India, or WWEurope (you see what I did there?) could be possibilities at the start of the next decade. WWE has plenty of information at its disposal and plenty of time to do the market research before deciding what the next step is to capitalize on international growth, but they need to shore up expenses first.

Many investors saw the increased expenses - short-term and long-term - and decided WWE is spending way too much money right now, ultimately decreasing the value of WWE stock for its shareholders. Linda McMahon said it's not something they can correct in one quarter, as they need to re-evaluate the cost-structure in each division.

What's funny about this is that WWE is clearly the most-established wrestling brand in the industry, yet there is still plenty of room for growth. As with most companies based in the U.S., the question is how to find the right international market to exploit, then deciding whether to export a product to that market or introducing a completely new product.

WWE has only skimmed the surface on the international market. They have the basic pillars: TV and PPV, live events, and merchandising. They just haven't found out where the steady stream of major dollars can be made without breaking the bank trying to lay the foundation. One quarter it might be an Australian tour, the next quarter it might be a European tour adding to the revenue total. Can they generate a steady stream in each market each quarter, though?

Based on some hostility from some investors and analysts during the conference call yesterday, WWE might be looking to pull back on some international growth expenses while they clean up admin expenses in Stamford. But, if WWE is committed to expanding live event touring and potentially planting WWE: India and WWE: China by 2011, now is the time to push forward with long-term initiatives.

TNA isn't a threat domestically, but they are a threat internationally. TNA doesn't have the resources as WWE, but as the company expands its international touring, especially if Midway can penetrate international markets with the new video game that's supposed to blow everyone away, then TNA will have an opportunity to compete outside of the U.S. against WWE.

When it comes to finding the next big thing or finding the next "territory" to conquer, Vince McMahon doesn't want to lose in the visionary department. The next big thing is drawing money in China, India, and Europe on a consistent basis. Not just with a tour every six-to-twelve months, but finding revenue potential with WWE's name potentially slapped on a new wrestling promotion or exporting talent on a regular basis.

WWE didn't have one of their better quarters, as there were some "unacceptable" elements to short-term expenditures. But, WWE doesn't want to be sitting here eight quarters down the line saying it's "unacceptable" that someone else is beating them to India and China or they don't have a firm international infrastructure in place to tap into those global markets.

While keeping expenses in check back home, WWE needs to keep one eye on 2011 if they plan on maintaining their desire and vision to dominate the market going forward.

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