With 731,000 Subscribers, WWE Falls Short of Goals for New Streaming Video Service

In February of this year, World Wrestling Entertainment (WWE) promised to give wrestling fans 24/7 access to their favorite wrestlers and events by switching from a pay-per-view revenue model to an over-the-top (OTT) subscription model. As we reported in January, the new 24-hour streaming WWE Network offers scheduled programming, exclusive content including 12 live events, original series, reality TV, a daily in-studio show, and an on demand library accessible anywhere on any device. Instead of paying per event, fans can watch all of their favorite “Stone Cold” Steve Austin and John Cena performances for just $9.99/month.For those who can never get enough wrestling, it was a dream come true. For WWE, it was a great way to capitalize on streaming-video technology and the popularity of set-top boxes and other Internet-connected devices to grow its fan base. Unfortunately for WWE, its subscriber growth isn’t quite what it expected, causing concern that revenue losses will continue.Estimating it would acquire 1 million subscribers in its first year, WWE actually engaged 731,000 subscribers at the end of the third quarter, representing $87.6 million in annual revenue. While that could grow to 1 million by WWE Network’s one year anniversary (Feb. 24, 2015), subscribers only grew by 31,000 in the third quarter of 2014, an increase of only 4.4%. At that pace, the estimate will fall short by about 220,000 subscribers.However, one interesting area of growth is the international market. Rolled out internationally in the third quarter, 90% of WWE’s new subscribers were outside the US. With a UK roll out planned in November, the international subscriber base may continue to grow.To that end, WWE has dropped its requirement for a six-month commitment, and it is offering a one-month free trial during November (you will need a debit or credit card or PayPal account to sign-up) It is also retaining its existing cable presence on the USA Network, and it is trying out an HBO premium channel in Canada, so it isn’t putting all of its eggs in the proverbial basket.Lesson learned: If you build it, fans will not necessarily come, particularly in an industry that may have already reached its peak. WWE will need to reach out to a new generation of viewers and continually tweak the OTT model to find just the right product and pricing mix. We’ll check in at the end of February to see if WWE can transform its lagging network into a main event. 

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