Desperation Setting in With WWE and Their WWE Network?

There was a time, back in the '80s, where if you asked any of the young WWE (back then called the WWF) fans how much they would pay to be able to watch essentially any relevant moment in WWE history any time they wanted to from any computer or smart phone, the answer would have involved multiple zeroes per month and a one-time payment of a kidney or testicle.

(Actually, the answer probably would have been "What's a smart phone?" Back in the '80s a "smart phone" was one that incorporated the revolutionary touch tone technology instead of rotary dial. "Look, maw...these buttons make smart noises!!" But I digress.)

Now, in 2014, the WWE archive is available to anybody with a computer, smart phone, tablet, Xbox, whatever. Thanks to the WWE Network, an online network launched back in February, you can have access to all that great content. And for how much?

Only NINE NINETY NINE... (WWE fans know.)

So why then are subscribers to the WWE Network lagging behind forecast amounts to Wall Street? Why is the on-air talent having to shill for the network repeatedly on its broadcasts? And why is WWE having to get far more flexible with its subscription commitment?

These are all valid questions. Let's lay the groundwork...

Where is WWE right now as far as WWE Network subscriber count?

Here is the latest, according to WWE's third quarter earnings report:

WWE Network added 31,000 subscribers in the quarter, representing a 4% increase from June 30, and reached 731,000 subscribers at quarter-end. Subscriber growth reflected the acquisition of 286,000 subscribers, which was 71% above the gross subscriber additions in the period between April 7 (the day after WrestleMania) and June 30 (WWE Network added 182,000 gross subscribers during the April 1- April 6 period, which included WrestleMania). Through September 30, WWE Network had attracted approximately 971,000 unique subscribers with 75% of these subscribers active as of that date.

Originally, when the network was launched, the company had forecast 1,000,000 initial subscribers, thinking that the combination of archived footage and the access to WWE's pay-per-view events would be an easy cost justification for just $9.99 per month (No, WWE fans, I can't read that number either without saying it in crowd-speak.) Hell, normally, you pay $100 for just a couple of pay-per-views, so if you typically purchase three pay-per-view events per year, you're already whole.

Still, as you can see, subscriber count has fallen short of the goal. With a more global reach growing each month, those numbers will increase, but the initial push was largely disappointing, certainly to Wall Street, where WWE's stock has been hammered this year. As you can see, there's about a 25 percent runoff of subscribers who end up canceling (the reverse of the 75 percent of the 971,000 uniques since inception).

With a six-month initial commitment required (up until last week, more on this in a moment), this would be the quarter where we start to see how "sticky" WWE Network is as a brand. How many subscribers keep paying the $9.99 per month? Perhaps more nebulous to quantify, how many potential subscribers were scared off by a six-month commitment?

Well, that brings us to the next question...

So what is WWE doing to try to make up for its shortfall?

Late last week, I received the following press release from WWE. It was actually the impetus for this post:

STAMFORD, Conn., October 30, 2014 - Much like other subscription businesses including Netflix and Hulu Plus, WWE® (NYSE: WWE) will be offering:

November For Free: New subscribers will receive WWE Network free of charge for the entire month of November - including Survivor Series on Sunday, November 23. New Simplified Price Plan: WWE Network will be available for $9.99 per month with no commitment and the ability to cancel at any time.

"We are excited to offer new WWE Network subscribers the month of November free to experience all of our live programming, explore thousands of hours of video-on-demand content, and watch Survivor Series, one of our most popular events," said Michelle Wilson, WWE Chief Revenue & Marketing Officer. "Our research combined with best practices in digital subscription businesses affirms our belief that a simple, single price plan will help us continue to grow WWE Network's subscriber base."

WWE Network features 24/7 scheduled programming, all 12 pay-per-view events LIVE and the most comprehensive video-on-demand library with more than 2,600 hours of content, including every WWE, WCW and ECW pay-per-view, all for $9.99 per month with no commitment and the ability to cancel any time. WWE Network programming includes groundbreaking original programming, reality shows, documentaries, classic matches, exclusive coverage of special events and more. The U.S. English language version of WWE Network is available on an over-the-top basis in more than 170 countries and territories.

Like other digital subscription services, such as Netflix and Hulu Plus, fans are able to subscribe online by going to WWE.com and clicking on the WWE Network button on the top right corner of the navigation bar.

It's clear that WWE sees itself competing in the same space as monthly subscription content houses Netflix and Hulu, and accordingly, adjusted its contractual (or lack thereof) strategy to allow people to sample the network and cancel at any time. The question, and really only WWE itself knows the answer, is "Is this change in strategy a normal market adjustment to competition or a desperation move?" Rumors of moving the network to conventional television and off of the Internet have been bubbling recently, and this would be a logical (if not impulsive) last-ditch move to make the web distribution strategy work. Something to think about.

What have been the holes in WWE's strategy thus far?

1. Pay-per-view inclusion I'll be honest, when the network was rolled out, I was shocked when I heard that WWE was going to include all of their pay-per-view events for free on the network. It seemed like, at the very least, they were severely cannibalizing themselves and giving away too much. The fact that they are falling short of their goals while giving away their marquee events for $9.99 per month should be a little scary to those inside the walls of WWE's Stamford, Connecticut, headquarters, in terms of what the public thinks of the WWE product as a whole right now.

On a content note, having watched most of the pay-per-views since the network's inception, I can say that the secondary pay-per-views (the ones that aren't Wrestlemania, Summer Slam, Survivor Series or Royal Rumble) have become more like glorified episodes of Monday Night RAW, with many non-finishes and open-ended story lines. If the quality of the pay-per-view events is gravitating toward the $9.99 "value range," that's not a real win for fans.

2. The existence of YouTube While there is plenty of first-run programming on WWE Network, reality shows like Legends House and some 30 for 30-ish documentary-type stuff (Monday Night Wars, most prominently featured), a lot of what fans want in terms of archived footage can be found for free on YouTube, and in many ways it's easier to find there. If you want to watch an archived pay-per-view for one specific match, what's easier? Logging into (and paying for) WWE Network, locating the exact pay-per-view and then scouring it for the match? Or going to YouTube and putting "Mankind Undertaker Hell in a Cell" in the search box? The Internet gives us way too much free stuff these days, which is why $9.99 probably feels like a lot to some people (and why bloggers are underpaid, dammit!)

3. Password sharing This is more of a nuts-and-bolts thing than anything else, but using someone else's password to get on the WWE Network is reportedly fairly easy to do and, I'm sure, happens quite a bit. I don't know how preventable that is, I just know that it's probably eating into the potential subscriber base, although again, back to my point in the previous paragraph -- the Internet has put everyone's "content cost" expectation at "free," so who knows? Maybe there'd be a huge PR blowback if they prevented password sharing. (The moral of the story is that you people reading and surfing stuff on the web are scavengers! JACKALS!!)

4. WWE's current product is not hot right now It's hard to get people excited about spending money on an ancillary product to a core product that is cold right now, and WWE is cold. Due to injury (Daniel Bryan), attrition (C.M. Punk's quitting) and a champion (Brock Lesnar) who is never on TV, in an industry of peaks and valleys, WWE is most certainly in a valley right now.

WWE Hall of Fame announcer Jim Ross summed it up well in his blog:

This matter of the WWE Network can be analyzed in a variety of ways but the bottom line is that the WWE core product isn't 'hot' and when a brand isn't hot it's difficult to sell spin off products of the brand such as subscribing to their digital network.

WWE Creative must do a better job of heating up the WWE TV shows, allow new, fresh, young talents to take on bigger roles and introduced new talents with a systematic plan to bring them in with fanfare and instant credibility.

Plus selling he Network primarily because of the price of $9.99 which has essentially become a punch line in a joke and is not a selling point. It's akin to saying that we have a lunch special for $4.99 but not saying what the special menu item is. In a three hour raw, WWE should feature vignettes of network offerings to remind fans of what they are missing. If I'm not seeing, feeling, or experiencing whet it is you want me to buy I'm highly unlikely to buy it.

The three hour, WWE flagship broadcast, Monday Night RAW, always has segments that should not make air and using some of the great content from the Network in lieu of such suspect content is a win-win for everyone.

I enjoy the WWE Network and have had it since day one and I'm not paid or encouraged to say so. I'm simply speaking as a fan but I do feel that the concept is a viable one but it will be a couple of years or so it seems before the financials reflect the concept. But it will happen if it is promoted creatively and with weekly time on RAW specifically designated for Network promotion in an enhanced way and by using more time.

Things such as 'This week in WWE Network history' to the superstars themselves tweeting daily what they are watching or are going to watch on the Network are just two simple ways to drive traffic to the newest, most important aspect of the company. Things need to change because what is being utilized currently is obviously not working. The good news is that WWE can change their creative as it relates to their air marketing plan in a manner of days or weeks to improve their results of gaining new subscribers to the WWE Network.

The old, promotes philosophy of giving the audience what they want and they will buy it still is applicable today in any business.

Well put. He left out "bring Jim Ross back to RAW" as part of the solution, but maybe that's just me.

At any rate, it will be an interesting next several months for WWE and its network. I'm sure there were many outlets, both on the television carriage side (Comcast, AT&T, DirecTV) and the content provider side (sports leagues, primarily), who are very closely watching this WWE saga play out.

Are sports fans (or in this case, sports entertainment fans) ready for an entirely on-demand web-based network? WWE's early results on the WWE Network say "perhaps not quite yet."

Listen to Sean Pendergast on SportsRadio 610 from 2 p.m. to 6 p.m. weekdays. Also, follow him on Twitter at http://twitter.com/SeanCablinasian.


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