World Wrestling Entertainment executives said that’s the best thing – WWE is not a technology company. Instead of working as a streaming service, he now wants to return to creating content.
WWE will host the Wrestling Super Bowl this weekend with its WrestleMania event on NBCUniversal’s Peacock streaming service. It’s part of an over $ 1 billion exclusive rights deal that redirects the longtime entertainment company to focus on its product and avoid streaming wars.
“After all, we are not a technology company and we should not try to be,”
CFO Christina Salen added: “Everyone has a plus. There’s Disney +, Paramount +, Discovery +, but not everyone has branded content with a huge fan base like WWE. So, we’ve seen that there’s a huge demand for what you need. to offer, and we could take that money and double it and do what we do best, which is satisfying. “
The focus on content creation shows something of a counterpoint to the ongoing wars in which companies create applications and services loaded with movies and TV shows. WWE is abandoning its own streaming service and instead focuses on creating new things for people to watch in Peacock.
The content game is just the beginning of WWE in this new decade as it prepares for a post-Covid world with new revenue opportunities. But the future will also raise questions about whether WWE is a smart investment and how it plans to move closer to more competition that wants to jeopardize its market share.
WWE CEO Stephanie McMahon of the United States spoke at the 2018 Web Summit in Lisbon, Portugal on November 6, 2018.
Pedro Fiusa NurPhoto | Getty Images
Like the rest of the entertainment world, WWE had to innovate on the go after the pandemic hit last March. The company moved events to Florida to continue to operate and retain media rights. He adapted to no spectator by moving his full pyrotechnics content into more cinematic production around wrestling matches.
“It’s like a movie,” McMahon said after describing the longtime hero of last year’s Undertaker-style cemetery game. “And in addition, the real innovation came with investing in Thunderdome,” an indoor complex built in Florida to host events.
“We experimented with drones, pyroscopes, augmented reality that we couldn’t do before, mostly because of living bodies in the actual stands,” McMahon added. “It will be a lot of testing and learning what makes sense to move forward and try different things,” she said.
The real transition of WWE began before Covid-19, when Chairman and CEO Vince McMahon fired two critical executives in January 2020. The unrest over this change focused on seeing the future differently.
In 2014, former WWE co-chair George Barrios saw the value in the company’s new streaming service. It cost $ 10 a month and helped the company move away from the traditional pay-per-view. But WWE failed to increase its subscribers, reaching about one million in the United States. In addition, the company came out of another unsuccessful professional football start with XFL.
WWE Network dismantled its operations in the United States by early 2021 and signed with Peacock. This move provides live WWE events and a classic wrestling library for Peacock subscribers.
“It’s a big win for WWE,” said media rights expert Dan Cohen. “The price point is falling, so you hope subscribers and eyeballs will rise. They have left the technology space and must not continue to maintain and update technologies that change every minute. “
Salen, the former CFO of Etsy, was one of two new executives hired in 2020. She helped Etsy go public in 2015 and is now partly responsible for WWE’s financial future, including more merchandising, e-commerce and corporate sponsorships that will include new campaigns with a longtime partner, Procter & Gamble.
In its fourth quarter report for 2020, WWE said it had suffered $ 84 million and generated $ 238.2 million in revenue. But although WWE hosted most of the events without fans last year, it still earned $ 970 million thanks to Fox Corp.’s rights fees. and NBCUniversal.
WWE currently has a market capitalization of about $ 4 billion and is trading at about $ 55 per share. Salen said the WWE network has not lost money, but again its consensus on the C-Suite is focused on rising license fees for its content and to stop working like Netflix.
“Just as we were first to pay per impression, first to direct users, and now we are the first to return to aggregators,” Salen said. “We thought it was the right time. And over the next few years, we’re pretty confident that we’ll be proven right.”
Salen said he often receives inquiries from Wall Street: Why should investors be interested in WWE stocks?
“Investors know that I decide to spend my time in places where I ultimately think there is value to be created,” she replied. “I think there is this huge opportunity in the next few years to create more value for shareholders.”
No worries about competition
WrestleMania 37 is scheduled for this weekend at Raymond James Stadium, the site of the Super Bowl LV of the National Football League, held in February. “
He is banking for the 25,000 fans who show up, and McMahon said the event will mimic many of the NFL’s Covid-19 protocols – seats, mask distribution, hand sanitizer. “Only the configuration is different because we can have people on the floor,” she added.
However, WWE needs to return to the arenas and perhaps more than the professional leagues. The company makes a significant portion of its revenue from live ticket sales and travels more frequently throughout the year.
“As soon as the arenas are open for business, we can start spinning this,” Salen said. “But there has to be a critical mass of arenas open to business for us to do that. And we just don’t see that right now.”
WWE must also monitor another company that wants to take advantage of its market share. WarnerMedia’s Turner Sports property is reinvesting in the fight against All Elite Wrestling (AEW). The network last hosted a large wrestling company in 2001, when it owned the World Wrestling Championship (WCW), which WWE bought.
AEW is run by Tony Khan, the son of National Football League team owner Shahid Khan, and has financial support. So far, he has won praise for his production.
“The theater is good,” Cohen said. “The quality is good. Where there is no AEW, however, it is in stellar strength.”
Internet chatter suggests that WWE will spend money to prevent AEW from achieving this mission. Asked about this, Salen said the rumors were not accurate. She added that AEW is more competitive for its NXT property. This division is like the NBA wrestling league.
“We’ve always had competition, it’s part of the game,” Salen said. “Internally, we pay much more attention to Game 7 of the World Series and if Raw faces it.”
The President of World Wrestling Entertainment Inc. Vince McMahon (L) and wrestler Triple H appear in the ring during the WWE Monday Night Raw show at the Thomas & Mack Center on August 24, 2009.
Ethan Miller Getty Images Entertainment Getty Images
What is the future of WWE?
But while WWE could once again stop a significant contender, it cannot stop the future. And among the key questions he faces: How long will Vince McMahon continue as CEO? And who will replace him?
His daughter suggested that this would be a collaboration of “institutional knowledge” that would make decisions when her father decided to retire.
“No one has all the experience and passion in building and developing this company from a smaller regional business to this amazing growth company as it is today,” McMahon said.
Asked to describe the future of WWE in the long run, McMahon used the company’s slogan. “It summarizes everything about WWE,” she said. “It is: then, now and forever.”
Disclosure: Peacock is the streaming service of NBCUniversal, the parent company of CNBC.