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Thoughts On The WWE Network Global Expansion

|Includes:World Wrestling Entertainment, Inc. (WWE)

Unfortunately, since WWE refuses to give us a new WWE Network subscriber update, we don't know where they are today. It remains to be seen whether WWE's estimates for grand adoption of the WWE Network come true. Here are some thoughts on the domestic+international launch targets for the WWE:

a. I don't buy WWE's Consumer Research numbers. The US figures that WWE quotes are so high I am flabbergasted. They don't jive with other independent surveys (ESPN, Scarsborough Research) or even the weekly number of households watching the flagship programming (between 2.8M and 3.2M weekly US Households for Raw).

b. The international attendance for WWE has dropped 9300/show (2003-2004) to 5,900/show (2013). At this rate, they're dropping 5% year over year, even though the number of int'l shows has been dropping from 77 (2008) to 65 (2013). The only areas that WWE has been "growing" in international markets has been in the Middle East Tours, and that's not where they're launching the WWE Network.

c. WWE has not created any new global stars. (American) Daniel Bryan, current WWE Champion, is not only injured (neck surgery last week) is still a distant #2 or #3 to long-term star John Cena in merchandise sales. The closest thing they've had to a specific regional star is that Sin Cara (who is actually being portrayed by a different wrestler than the original Mexican star) will sometimes sell more merchandise when WWE is touring a US-Mexico border area such as Texas.

d. In the historical PPV marketplace, WWE was typically above 60% North American (US/Canada) PPV buys. With only a third of buys coming from an international marketplace, I would be only believe that at a full launch, steady-state, only about a 1/3 of the demand for WWE Network would come from overseas. So, 3M subscribers would be 2M US+Canada plus 1M International. I think that's too optimistic, especially since I am very dubious of WWE even hitting 1 million subscribers by the end of 2014. And that the WWE Network isn't (announced as) launching in some larger WWE international markets (France, Germany, Spain, Italy, Austria) at this time.

e. In the initial domestic launch of the WWE Network, on opening day, I took some surveys from subscribers to estimate what percentage were actual US residents and which are from overseas. We found that 17% of first-day signups were from GMT timezone (Europe). I don't believe that the ratio held out for people that subscribed in later weeks, but the initial domestic WWE Network has a significant number of WWE Hardcore Fans from overseas already included in that 667,287 number. I believe that there will be more weakness in Global launches because there won't be the sudden rush that comes with the early adopters as before. We're already seen notable amount of UK fans who subscribe to US version of Netflix due to library/content differences, and WWE hasn't been able to prevent these situations because fans are using IP-masking services and paying via Paypal (using fake US addresses - such as Hotels).

f. We're looking at households - not viewers. Just like Netflix, there is going to be multiple viewers per households, so one subscription probably equals between 1.3 and 1.5 "WWE viewers".

g. There's some questions about whether the international launch of the WWE Network will be identical to the US version. In particular, some of the global TV deals & PPV contracts suggest that there might not be the same content offered in the global WWE Network. There's a big difference between the US TV deals and many of the Asian/European TV deals when it comes to PPV/Pay-TV contracts. If the service isn't launched OTT but rather as attached to the global PPV providers, they can hamper adoption.

h. WWE has a much shorter history in these countries. UK has the longest relationship with WWF/WWE, going back almost 20 years, but the "80's nostalgia" that WWF counted on for US fans isn't nearly as present in overseas territories. Also, the population of United Kingdom (63M), Canada (35M), Australia (23M), New Zealand (4.5M), Singapore (5.5M), Hong Kong (7M) , Nordics (25M) is about 163 million -far less than 314 million. And that's covering countries with weaker (or expensive) broadband access (including Canada) and weaker affinity for American WWE content. I think it's telling that the original WWE presentation put US break-even at 1 million, but int'l at only 250k. It's just a quarter of the demand of the US launch (which already had a lot of int'l hardcore fans "sneaking in").

Chris Harrington ( is a professional wrestling analyst and writer for WhatCulture.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: WWE