WWE NETWORK: Inside the decline in Network subscribers that investors are battling

By James Caldwell, PWTorch assistant editor

One of the interesting subplots to WWE’s Fourth Quarter & year-end 2015 financial report is how individual elements of “WWE Network” is affecting the perception of WWE’s overall business.

Investors and analysts seem mixed on how to receive the Network. One person might emphasize WWE comfortably surpassing the break-even point, while someone else might look at a loss of domestic subscribers. Someone else might be thinking about financial executive George Barrios’s TV claims in 2015 that WWE Network could reach 3 million subscribers over the long haul and try to figure how that’s possible based on current levels.

One of the big metrics that is slowing growth is Network Churn, which WWE did not report in their Fourth Quarter/year-end financial report, but included in their conference call presentation.

In the fourth quarter, WWE reported a net loss of 16,000 Network subscribers. The break down was 50,000 lost domestic subscribers and 34,000 gained international subscribers.

Overall for the year, WWE lost 110,000 subscribers from the peak in Q1 (WrestleMania period) until the year-end Q4. The majority were from the domestic market.

2015NetLine

The Q4-2015 net loss of 16,000 subscribers breaks down as such:

– 389,000 new subscribers in Q4-2015 (vs. 336,000 new subscribers in Q4-2014 during the ramp-up period).

  • Also, the number of new subscribers was down from 453,000 new subscribers in the third quarter.

– 405,000 lost subscribers in Q4-2014 (vs. 251,000 lost subscribers in Q4-2014).

  • Also, the number of lost subscribers was up from 376,000 in the third quarter.

The fourth quarter’s 405,000 lost subscribers is not that far off from WWE losing 508,000 subscribers in the second quarter right after WrestleMania 31, which is when you expect to see a big drop in subscription numbers for people ordering the Network just to watch WrestleMania for $9.99.

The key for WWE is understanding whether this is part of the natural cycle of the Network after settling on the $9.99 price point with a subscription that can be canceled any time. WWE also noted in their quarterly conference call that they will continue the free introductory month trial.

NetworkChurn
(2014 in blue, 2015 in red)

Another question for WWE is why they lost 50,000 domestic subscriptions despite adding 85 hours of original Network programming in the fourth quarter.

George Barrios did not address why they lost subs in the quarter, stressing that WWE was pleased with Network consumption “all year,” emphasizing a yearly view, as opposed to quarterly.

Barrios said WWE looks at “specific programming engagement” to see what subscribers are consuming. He said “some shows are enjoyed more than others,” but they are happy with the original programming mix.

Another proposed idea for retaining subscribers is adding more tape library content. Barrios noted they have a “long way to go” in terms of taking all of their library content and putting it on the Network. He said the key is making sure its relevant to today’s audience and not just putting content on the Network for the sake of adding more content.

Broadening out the Network’s availability, WWE management was asked if they would consider bundling the Network with other content platforms. Barrios said they have had discussions with big players and niche platforms about packaging the Network, but they are just talking at this point with nothing to announce.

The balance for WWE is trying to expand their reach and subscriber base, to perhaps improve retention, but not wanting to share revenue with another platform that would cut into their revenue. It would have to reach a point where the added revenue/exposure from bundling with another platform offsets the loss of shared revenue. Right now, WWE is comfortable going at it alone.

1 Comment on WWE NETWORK: Inside the decline in Network subscribers that investors are battling

  1. Gee maybe the subs dropping is the same reason ratings are sucking. Their product sucks the proverbial tail pipe as evidence by their asinine booking that continues. Putting the WHC on Paul didn’t help either.

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