A confession, I grew up on the WWF and Hulk Hogan. So I’ve been a fan most of my life. It’s the male version of a soap opera and with their change over the past few years to a PG13 model, it is even family friendly. Monday night Raw is the white noise on my computer on Monday nights.
Monday February 24th is the start of something big and it comes from an unlikely source. Vince McMahon and the WWE. As much as Netflix changed the game with their streaming, I believe this is the next move in that world. A company streaming a major source of their revenue via an affordable monthly fee.
As a side note, here is also a good write up I found when trying to look up the numbers behind this move.
For many years the WWE has been trying to secure a deal with cable providers to launch their own network. Cable providers have balked at those attempts. Reports, the validity of which can’t be really verified, claim that the best offer the WWE got was for 25 cent per subscriber. So the WWE would get next to nothing on the airing of their vast video library, while the cable networks would charge folks $10 or so a month for the service.
The WWE took a route that if successful will turn the way things happen with larger organizations such as the NFL, NBA, MLB and other major sports.
They launched their own online network and gave it access to all of their pay per views. They will charge $9.99 a month and keep a large chunk of that. Plus all advertising they sell stays with them. If you ordered just WrestleMania each year (a common occurrence in my house) you pay for nearly 60% of the yearly cost of the WWE Network, plus you get access to 1500 hours of the WWE’s vast video library. If you order two pay per views a year (has never happened in my house) you pay for the cost of the entire year.
My very rough math, and I erred on the side of being way low is that WWE PPV’s do about 160 million in revenue each year. The vast majority of that stayed with the cable companies as the WWE is just a 117 million dollar a year company.
Lets say the WWE gets one million in subscribers to their network and they earn just $5 per month on those subscriber it would mean $60 million in revenue and this doesn’t include a dime of advertisement revenue. I don’t see how they lose on this deal because I do believe that one million subscribers is the floor, and that is nearly a break even amount of money before they sell advertisements.
If the WWE is successful I could see the major sports teams go the same route and skip the middle man when it comes to advertisement sales. Especially when the amount of people cutting the cord is doing nothing but growing each year. In fact the ONLY reason I haven’t cut the cord is because my wife and son love the Cincinnati Reds. I’d pay a decent amount if I could stream all Reds games via the web if that meant I could drop the cable company.
In the long run I think the savings for cutting the cord will decrease, but consumers will get what they truly want.. pay for what you want, not the other 300 channels they give you.
Hard to believe that the world of wrestling entertainment is leading the way on this front.