Managers of World Wrestling Entertainment said it’s the best – WWE is not a technology company. Instead of acting as a streaming service, he now wants to create content again.
WWE is hosting the Super Bowl of wrestling this weekend with its WrestleMania event on NBCUniversal’s Peacock streaming service. It is part of a more than $ 1 billion exclusive rights deal that repositions the long-standing entertainment company to focus on its product and avoid the power wars.
“At the end of the day, we are not a technology company and we should not try to be that,” WWE Trade Officer Stephanie McMahon told CNBC. “We are a content enterprise at our core, and we want to do what we do best.”
Kristina Salen, CFO, added: “Everyone has a plus. There’s Disney +, Paramount +, Discovery +, but not everyone has content with a large fan base like WWE. So we saw that there is a big demand was for what we had to offer, and we can take that money and double it and do what we do best that is satisfied. ‘
The focus on content creation shows a kind of counter-story of the power wars where companies create programs and services loaded with movies and TV shows. WWE is ending its own streaming service and is instead focusing on making new stuff for people to watch on Peacock.
The content game is just the beginning for WWE in this new decade as it prepares for a post-Covid world with new revenue opportunities. The future will also raise questions about whether WWE is a smart investment and how it intends to approach more competition that seeks to threaten its market share.
Stephanie McMahon, American trademark officer from WWE, speaks at the Web Summit 2018 in Lisbon, Portugal, on November 6, 2018.
Pedro Fiúza | NurPhoto | Getty Images
Lessons learned
Like the rest of the entertainment world, WWE had to innovate again after the pandemic in March last year. The company has moved events to Florida to continue and save media rights. It was adapted for no spectators by the content of the pyrotechnics transferred to a more cinematic production around wrestling.
“It’s like a movie,” McMahon said after describing longtime character The Undertaker’s cemetery-style contest last year. “And besides, the real innovation came with the investment in the Thunderdome” – an indoor complex built in Florida to host events.
“We were experimenting with drone cameras, pyros, augmented reality that we could not do before, mostly due to live bodies on the actual plots,” McMahon added. “It’s going to test a lot and learn what makes sense to bring different things to the fore and try,” she said.
The real transition of WWE began before Covid-19 when Vince McMahon, chairman and CEO, fired two critical executives in January 2020. The confusion surrounding this change was to see the future differently.
In 2014, former WWE co-president George Barrios saw value in the company’s new streaming service. It cost $ 10 a month and helped the company move away from traditional pay-per-view. But WWE has failed to grow subscribers, reaching about one million in the United States. In addition, the company has left another failed pro football start with the XFL.
WWE Network disbanded its operations in America until 2021 and signed with Peacock. The move offers live WWE events and a classic wrestling library to Peacock subscribers.
“It’s a big win for WWE,” said media expert Dan Cohen. “The price point is dropping, so you’re hoping subscribers and eyeballs are rising. They’ve left the technology space and do not have to maintain and update the technology that changes every minute.”
Salen, the former chief financial officer of Etsy, was one of the two new executives appointed in 2020. She helped Etsy go public in 2015 and is now partly responsible for WWE’s financial future, including more merchandise, e-commerce and corporate sponsorships, which will include new features. campaigns with a longtime partner, Procter & Gamble.
In its report for the fourth quarter of 2020, WWE said it had a hit of $ 84 million and earned $ 238.2 million in revenue. But even though WWE hosted the most events last year without fans attending, it still earned $ 970 million thanks to Fox Corp. and NBCUniversal’s rights.
WWE currently has a market capitalization of approximately $ 4 billion and trades at approximately $ 55 per share. Salen said the WWE network did not lose money, but its C-Suite consensus was focused on increasing license fees around the content and to stop working like Netflix.
“Just like we were first pay-per-view, first direct-to-consumer, and now we’re the first to go up in collectors again,” Salen said. “We felt it was the right moment. And over the next few years, we’re pretty confident we’ll be right.”
Salen said in a query about Wall Street: why should investors be interested in WWE shares?
“Investors know that I choose to spend my time in places where value must ultimately be created,” she replied. “I think there is this tremendous opportunity to create more value for shareholders over the next few years.”
WrestleMania 35
Source: WWE
No worries about the competition
WrestleMania 37 is this weekend at the Raymond James Stadium, the site of the Super Bowl LV of the National Football League, to be held in February. ‘
There are 25,000 fans in attendance, and McMahon said the event will mimic many of the NFL’s Covid-19 protocols – seating, 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 arenas, and perhaps more than pro leagues. The company makes a significant portion of its revenue from direct ticket sales and it travels regularly throughout the year.
“Once arenas are open for business, we can start expanding them,” Salen said. “But there has to be a critical mass of arenas open to business to be able to do that. And we just don’t see it right now.”
WWE must also monitor another company that wants to use its market share. WarnerMedia’s Turner Sports property has reinvested in the wrestling match with All Elite Wrestling (AEW). The network last hosted a major wrestling company in 2001 when it owned the World Cup (WCW), which WWE bought.
AEW is run by Tony Khan, the son of Shahid Khan, owner of the National Football League, and has financial support. And so far he has won praise for its production.
“The theater is good,” Cohen said. “The quality is good. Although AEW is lacking, it’s star power.”
Internet chats indicate that the WWE will spend money to prevent AEW from accomplishing the 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’s G-League for wrestlers.
“We’ve always had competition, it’s part of the game,” Salen said. “We are paying internal attention to a Game 7 of the World Series and if Raw is going to act against it.”
World Wrestling Entertainment Inc. chairman Vince McMahon (L) and wrestler Triple H appeared 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 may once again hold back a major challenger, it cannot stop the future. And among the key questions it faces: How long will Vince McMahon remain CEO? And who will replace him?
His daughter suggested that it would be a collaboration of ‘institutional knowledge’ to make the decisions when her father decides to act.
“No one has all the experience and expertise and passion to build this business and grow it from a smaller regional business to this incredible growth company it is today,” McMahon said.
McMahon was asked to describe the long-term future of WWE. “It sums it all up about WWE,” she said. “It is: then, now and forever.”
Disclosure: Peacock is the streaming service of NBCUniversal, parent company of CNBC.