- WWE.com had a very large increase in Google organic search engine traffic for the August 17th event.
- Based on an 26.9% increase in search traffic, this should substantially increase network subscriptions.
- Foreign expansion will only accelerate WWE past the break-even point as it's now over 30% of its cable business.
WWE.com (NYSE:WWE) had a large increase in Google search engine traffic of 26.9% during Summerslam that should substantially increase network subs.
Thesis & Catalyst For World Wrestling Entertainment, Inc. ('wwe')
I was able to obtain numbers on Google search engine traffic (from semrush) that show a tremendous increase in search traffic to wwe.com. Although no one other than Vince McMahon and George Barrios have access to exact site numbers, when individuals go to a search engine and type in 'wwe.com' they see numerous results. These results are meaningless for investment purposes. What I've been able to access is the daily organic traffic count from Google on the term 'wwe.com'. These numbers are critical and the only public information available (and it took me hours of research to find) in deciding whether the network is picking up the required subscriptions to hit wwe managements metrics.
Here are the stats: At its peak in April 2014 (at the time of Wrestlemania) web search traffic from Google to wwe.com just in the USA was 3,434,632. Then on August 17th with the Summerslam traffic it spiked up to 4,357,057. This spike represents a 26.9% increase in traffic. Another critical piece of information, is that most subs go directly to the wwe.com site and are not included in the above numbers. Interestingly enough, Google search engine traffic peaked out at 4,466,284 on August 21st.
A further analysis of past numbers show that subs who will hit the 6 month cancellation window in 3q 14 are from the start of the network on February 24th to March 31st. This number was 495,000. During one of the WWE presentations, estimated non-renewal was pegged at 4-6% of subs based on the Netflix model. However, like tickets to a Bruce Springsteen concert, the most loyal fans are the ones waiting in line hours, or during his prime years days, before the ticket lines opened up, the loyals will stay. The loyals are the first subs to the wwe network.. they can't get enough. The subs count for the April 6th Wrestlemania event was 172,000. During the non-event days for the second quarter of 2014, sub count was 33,000.
Now to my assessment of the number of subs:
|Event||Time Period||Count||Subs||Conversion Ratio|
|Summerslam||Aug 17, 14||4,357,075||218,193||.050078|
|Wrestlemania||Apr 6, 14||3,434,632||172,000||.050078|
|Additions||922,443||Increase in Search||.268571|
|Total Subs||End of 2q 14||700,000|
|Nonrenewal||-29,700||Assumes 6% attrition of original subs|
|1 month sub||-21,819||Assumes 10% of subs do not renew|
|Add new subs from above||218,194||172,000+(.050078 X 922,443)|
|Subs end of 3q 14||866,674||Worse case scenario|
|Mexico google organic search||Aug 17, 14||118,189|
|Aug 12, 14||34,395|
The end of the 3rd quarter 2014 subs of 866,674 does not include foreign subscriptions. Knowing there's a mixture of US and foreign in all stats when the network started the later part of February 2014, what's not factored in is the growth in foreign exposure. WWE expanded its network reach to include 170 other countries in August 2014 with future roll outs planned later in the year. Additionally, as part of the original subscriber base would have signed up for the Wrestlemania event in April 2014, the number of subs would have been higher than the 172,000 listed. Also, there will be net subs during non-event periods that will add to the subscriber base. On the other hand, Wrestlemania is the most popular WWE event each year with Summerslam the third most popular. The number of subs for Summerslam would be lower than Wrestlemania on an apples to apples comparison. As it's difficult to measure these three metrics as far as subscribers, I kept my analysis simple until the facts are revealed. Bottom line, the 1,000,000 subs WWE management would like to hit prior to the end of the year is attainable. Listed are numbers for Mexico showing the substantial increase in Google organic search traffic numbers over a 5 day period.
In conclusion, it's all in the numbers. WWE is modeling the Netflix model to a 't'. My gut feeling is it will take the wwe network less time to become profitable than the 1 year it took Netflix. In a future article I will show you the metrics for subs at the end of the 1st q 2015 and how wwe will body slam all external negative expectations by analysts that are too focused on short term glitches and not looking at the big picture.