The WWE Network has definitely placed less importance on the drawing quality of PPVs.
Don’t get me wrong, WWE has been half-assing their PPVs for a long time now but at least they used to try to treat it like a big deal. In the past, WWE would try to sell PPVs. Now it seems as if they’re trying to sell the Network more than the PPV.
Now, you may be thinking that of course they have to sell the Network. How else are people going to see the PPV? And yes while traditional PPV still exists an option most people would much rather get the Network for just $9.99. So WWE would be stupid not to sell the Network. But the argument here isn’t them selling the Network, it’s them NOT placing the emphasis on the PPV aspect of the Network.
The focal point of every month now seems not to be the upcoming PPV, but rather the entire month being free to all new Network subscribers. They have now had two consecutive free month trials. If they really wanted to sell the Network as the home of a WWE PPV, they would at least try their best to build the PPV to entice viewers to purchase the Network as a packaged deal. The fact there is also an upcoming PPV seems more like a by-product of the Network (a by-the-way thing so to speak), not the main reason to get Network. But hey, they’re shows like Too Hot for TV and WWE 24 with Roman Reigns!
Perhaps the biggest example of WWE simply not giving a shit about their PPVs anymore, is this year’s Wrestlemania which was arguably one of the most forgettable, dull and uninspiring Road to Wrestlemanias ever. Despite this, WWE recorded a record breaking first quarter this year with Network subscribers increasing by 99% when compared with the previous year’s Wrestlemania. Furthermore, unlike the previous month and the two months that followed, the Network was no offered for free that month. Needless to say, Wrestlemania is the WWE’s biggest show and probably their biggest money making show. To give it away for free would be stupid. But the point to take home here is that WWE took advantage of the fact that people will buy a Wrestlemania no matter what. Therefore, they felt as if they could have gotten away with a half-assed build- and they did!
Instead of promoting the Network as the home of Wrestlemania, the WWE used Wrestlemania to promote the Network itself. It wasn’t, “Get the Network to see Wrestlemania!” it was more “Get Wrestlemania for the Network experience!” The product being sold for this year’s Wrestlemania was not a PPV (or the biggest show of the year) but rather the Network. Wrestlemania was used to exploit the Network and spike subscribers. It’s no coincidence that this year’s logo was a replay button. Or how about the week-long Wrestlemania Network experience with shows such as the Hall of Fame red carpet and the event itself? All, incentives not to get Wrestlemania but to get the Network.
Again, don’t get me wrong, the Network is the future home of PPV. And one of the reasons why is because of all the goodies subscribers can get leading up to a PPV. But don’t neglect the PPV. Don’t tell customers to get the PPV because there’s a red carpet event or because there is a Kick Off show or a post-show. Tell them to get the PPV because they have to- it’s a must see. Make the PPV the selling point. Most fans are not going to be enticed to watch a PPV because there’s a kick-off show, if they did people would not have complained about the build-up (or lack thereof) for this year’s Wrestlemania.
The recent free month binge the WWE is on shows how much they really care about the drawing quality. In the past, there was no way the WWE would have ever shown a PPV for free, albeit because fees are owed to cable provider. Still, even on a Tuesday, WWE tried to sell the PPV because it was a major source of revenue. With the Network, free month subscriptions are given in the hope that customers continue to support the Network not necessarily because of the PPV but because of everything the Network has to offer. Financially, it makes no difference what a customer purchases the Network for. Whether it is for a PPV, NXT, Slam City or Total Divas, it’s all the same price. When the entire month is given for free, all segments are attracted. It’s not just those who are subscribing solely for the PPV. By balling up all its services is one, they are able to attract a clientele much larger than the PPV market. It should no come as no surprise that the WWE’s attitude towards PPVs is not what it once was.
As the Network continues to grow in subscribers, the more entertainment-esque shows (Camp WWE and Swerved) will be added and less emphasis will be placed on PPVs. In fact, it may only be a matter of time until the term Pay-Per-View is replaced by “Network Special”. The WWE Network may have revolutionized the industry but at the cost of a great tradition.
WWE Records Record Quarter Revenue. (2015, April 30). Retrieved May 6, 2015, from http://corporate.wwe.com/news/2015/w...rterly-revenue
NB. The WWE Network was not internationally available for Wrestlemania XXX hence the astronomical increase in subscribers.
The WWE Network has certainly increased the importance of the drawing quality of WWE PPV's.
Firstly, let's look at what WWE perceive to be the major selling point of the Network: the price. WWE clearly believe this is the major attention-grabber to it, otherwise they wouldn't have promoted it to such an extent ad nauseam. The price of the WWE Network domestically is $9.99. The price of a pay-per-view (PPV) in the same market is $44.95, so assuming that every potential PPV buyer instead used the Network model for their PPV, it would take 4.5 subscribers to equal the revenue created by one PPV buyer from the traditional method
. Due to a decreased price, it should be clear that there would hence be an increased importance on getting more subscribers because of the reduction in consumer cost.
Some might say that there is sufficient non-PPV related stuff on the Network to reduce the importance on PPV's to attract Network subscribers. However, there is only so much wrestling a fan will watch
. Looking at Smackdown, for instance, despite the fact that it's on free television in the Stateside, it has never equalled the ratings of Raw, barring a very brief period in the early 2000's. Furthermore, much of the barrier of nostalgia on most of the older stuff on the Network will come down since all the older PPV's have been uploaded.
Much of the appeal in the older stuff will go pretty quickly when a classics fan sees many of the Clash of the Champions shows - the third edition in particular and the awful Bischoff experiment of NWO Souled Out '97, or when an ECW fan sees the likes of Hardcore Heaven and Wrestlepalooza '98, they'll realise that much of the product in its heyday was marred by chronic botching and selling which was either absent or incredibly clumsy. Is it any wonder why Paul Heyman specifically noted John Cena as someone who would have fitted right in at "The Land of Extreme"?
Even a lot of the WWF stuff in the 90’s had shortcomings, such as the squash filled In Your House PPV’s and the matches on Raw in the Attitude Era would rarely lost over a few minutes. Even a fan who believes that the older stuff does hold merit can only watch so much of the stuff, before unsubscribing and spending $120 per year on something better. It's not like they have tons of archived stuff either, they have minimal TV footage of WCW, ECW and the old WWF
. There is very little of World Class, AWA etc. and absolutely nothing of Memphis, which is bewildering, considering Jerry Lawler is a shareholder. They could also buy out Jerry Jarrett’s share too, since he hasn’t been attached to TNA for a decade, but they choose not to, as they believe their current footage is far more of a draw than its older stuff.
There’s also a larger emphasis on the PPV’s drawing well nowadays, since they are supporting the WWE Network. The Network has been a very costly endeavour by McMahon et al and has forced the WWE to make cuts all over. These cuts range from threadbare set designs for PPV’s, making staff work harder for their pay and releasing numerous wrestlers and other personnel from their contracts.
WWE are in a far more fragile financial position than they’ve ever been in over the 2000’s. What’s more is that if people aren’t interested by the PPV’s, then they aren’t interested in the Network, and the Network is quite simply too costly to accept failure on, it’s not like the debts caused by the XFL and WWE Studios, which can simply be written off due to Vince McMahon’s bizarre desire to succeed at something other than professional wrestling. The Network needs to survive and the PPV’s are the main ingredient in the sustenance of it.
It’s also worth noting that whilst the traditional method of purchasing pay-per-views is not as widely used as it has been in previous years, for obvious reasons, there is still some demand for WWE PPV’s using the traditional method. For example, the first three PPV’s of 2015 – Royal Rumble, Fast Lane and Wrestlemania netted WWE a cumulative sum of 450,000 buys
, which netted WWE a very attractive $9,000,000
. Given that the WWE only netted $28,600,000
from the Network in the first three months in 2015, it’s still worth noting that the standard method of purchasing WWE’s PPV’s gathered approximately 30% of what was gained by the Network
, so there still is the financial incentive to go all out for the PPV’s, as opposed to cruising because they already have a sizable amount of subscribers to their Network.
Since WWE is a publicly traded company and has been since before the turn of the century, it’s more important that the PPV’s fare well and attract people to the Network. This is because due to some of the monumental losses taken in earlier months by the Network, it is important that Vince and co keep their shareholders happy by producing the booming profits that many in WWE have grown accustomed to them generating. Without the large profits, the shares will be less valuable and will be creating less money, which would make being a shareholder in the WWE less attractive which would only be bad news for Titan Towers.
To summarise, the Network is WWE’s most important investment since the initial Wrestlemania. It simply cannot fail. The determinant of whether it fails or not is whether people are willing to invest to watch the monthly PPV’s, it’s as simple as that
WWE Financial Report listing its revenue (the buyrates stuff is on page 5
Over the last 30 years PPV’s have been a huge part of the WWE and a vital cash cow for the company. However with the times now changing trying to get people to spend a ridiculous amount of money each month has become pretty difficult. From this the WWE decided that moving all live 12 PPV’s onto the Network while also keeping them on Cable and Satellite but charging a much lower price themselves is the right way to go and a move which I believe has placed a lot less pressure and importance on their PPV’s to “draw”.
The whole package for just $9.99
Firstly, looking at the traditional PPV payment plan for the WWE we see that most shows were sold for $44.95 with Wrestlemania being sold for $59.95 each. From whatever is sold the WWE split the revenue with the cable and satellite companies keeping roughly half of that per buy for themselves, thus earning around $20 or so per every buy.
Essentially the company where having to push themselves to put on a show every 3-4 weeks and make everyone pay $45 while only gaining half of them for themselves
. In a world where everyone is becoming more technologically savvy and can watch PPV’s for next to nothing (or nothing at all) carrying on with this method was proving to be financially tough.
With the WWE network the pressure has slowly been removed from PPV’s to be a huge profitable aspect for the company. While offering not only all new PPV’s including Wrestlemania but also every single WWE, ECW and WCW PPV, old TV shows, weekly episodes such as NXT and original WWE content all in one big package for the same price the WWE have allowed themselves to benefit from guaranteed profits even if the PPV’s are not highly watched.
Think about it, different aspects of the Network appeal to different people. Some people would be happy enough paying the 9.99 just for being able to go back and have all the old PPV’s in one place, other’s may stick around for all the original content. This has put the company in a position whereby if 1,000,000, 100,000 or even 100 people watch their PPV’s they are still guaranteed to receive revenue from all their subscribers.
The traditional model is dead
“In the past PPV programming was a profitable and important segment that generated more than 15% of their annual revenue. Now it’s part of an expensive system which is struggling to reach break-even goals.”
The PPV business has been dead for quite a while in the WWE now and if nothing else they’ve been putting extra pressure on themselves to produce 12/13 or so PPV’s over the course of a year and not really gaining much benefit from it. Outside of Wrestlemania no other PPV really helps drive the WWE brand forward and make them real money. If anything the company has somewhat become reliant on Wrestlemania in the last few years to account for a huge portion of their yearly PPV revenue.
Just to weigh up all the numbers. In 2014 PPV revenue dropped from $82.5m to $45.5m representing a decrease in around $37.3m. However this loss was protected by the $69.5m they received from the Network (which accounted for around 13% of their yearly profit). That’s $69.5m they are getting even if no one watches their PPV.
Naturally people would look at this and say “but imagine how much more they could make selling through the traditional method”, but like I said, revenue has been going down year on year anyway and people are becoming smarter in getting the shows for nothing. Yes they are receiving a lot less money through the Network, but it’s more secure in the sense no one even has to watch the show for them to receive money from it.
Television: The new cash cow
With brings me to my final point. With PPV buys declining a new cash cow has seemingly emerged, that being their weekly television broadcasts such as Raw and Smackdown where they have been able to make up to over 30% of their annual revenue, almost double what they've been earning though PPVs over the last few years. In fact looking through their annual reports, between 2005 & 2013 (before the network came into the equation) PPV revenue has dropped from 23% of total revenue to 16% while Television revenue jumped quite substantially from 21% to representing 33% of total revenue.
Just think about it, while hardcore fans will most likely buy the Network regardless of how they feel about the current product the same can’t be said for the more casual wrestling fans. Traditionally where they would use the weekly episodic programming to sell their PPV’s now they have to do it to sell the WWE network instead with PPV’s taking a backseat, after all TV broadcast are the first point of contact for many fans these days.
Using the likes of Raw and Smackdown to not only promote their PPV’s but NXT, the original content, the video library etc… the WWE creates the potential to get the fans to find even one small aspect of the network they find interesting and BOOM extra income and potentially a new long term subscriber regardless of whether or not they even find the upcoming PPV interesting. It's certainly is a huge area for WWE to make sure they are producing gripping TV that keeps the fans tuning in no matter what.
Overall, PPV’s have proven to not be as big of a draw as they once were and by moving them over to the network while also keeping them shown on cable and satellite TV they are able to still get some revenue from TV buys while also removing the pressure on the PPV’s to bring in huge margins while also helping to guarantee revenue from network subscribers regardless of how many views their PPV’s actually receive.
Jupiter Jack Daniels
For most WWE enthusiasts, the Network was a dream come true. The opportunity to watch WWE's library from the past, the development brand known as NXT and various original specials. But also, the opportunity to watch upcoming PPV's in real time, exclusively on the Network. And when you combine what the Network has to offer and how much they've put into it, this has placed less importance on the drawing quality of PPV's.
There was a point in time, specifically the boom period of the Attitude Era, where the PPV business was big bank for WWE. The fiscal year 5/1/2000 to 4/30/2001 saw WWE generate $128.2 million in PPV revenue, which accounted for around 30% of the overall $438 million in revenue generated that year(1). But, as the years progressed, PPV revenue accounted for smaller percentages of overall revenue. By 2005, that number had shrunk to under 25%. By 2009, that number was less than 20%(2). And by 2013, the final pre-Network year, PPV revenue accounted for less than 18% of all revenue generated. PPV's were no longer drawing. Buys, from the start of the century, were shredded nearly in half ten years later. Why? Could be a variety of reasons. The most plausible is fans simply tuning out.
When it was strictly PPV and buys are declining, it paints the picture that what you're trying to sell isn't being bought. The glory days of the Attitude Era, where WWE averaged nearly 7 million PPV buys a year, had left. The five years, pre-Network, of being lucky to average 4 million buys was the new and totally undesired standard for a company that was generating more revenue from different streams. And, oddly enough, a key revenue stream for WWE, today, is a streaming service.
The promotion of that streaming service is evidence that WWE has placed less importance on PPV drawing quality. Because they're no longer selling you on a singular event or moment. Instead, they're selling you on an entire experience. No event or piece of content is taking precedent over another, as you're presented options, allowing you to decipher what you're subscribed for. In the case of some, it's the PPV's. For others, it's the library. And for others, it's the original content and specials. But, for WWE, it doesn't matter because, at the end of the day, you're still subscribed. And they can spin the subscriber count any way they please but it still reads the same: X amount of people have subscribed to their service.
We're all aware of WWE's jabs at people who opt to pay $45 to $70 per month for a PPV, instead of spending $9.99 for that and more. It's not done to promote the PPV. It's done to promote the WWE brand. Look back at the initial six month commitment. In the pre-Network days, it was a usual losing coin toss that the million buys for Wrestlemania would carry over for the next six months thru Summerslam. It never did. Largely because of a period of lackluster events between. But, with the Network and that initial six month commitment, it provided a bit of a safety net.
Typically, the May PPV, for example, doesn't draw. From 2010 to 2013, it garnered 140,000 to 197,000 buys(3). With a six month commitment to the Network, which was listed as 731,000 by the end of that six month commitment period, you're getting $9.99 per subscriber, regardless if they actually watch the event. That's $7.3 million for one PPV. Through sole PPV viewing via a cable or satellite provider, based on previous years, you can't expect more than 200,000 buys and by the time WWE takes their share (which is around 40%), that's around $4 million. Significant difference in potential revenue a May PPV could bring in. Essentially, WWE would make less from the 197,000 who buy it for $45 a pop than they would from X amount of subscribers who, at $9.99, have the ability to watch, probably won't but are still counted towards the revenue for that event through the Network for simply being subscribers.
And that applies to any WWE PPV. On it's own merit, 40% of 175,000 to 579,000 buys that non-Wrestlemania PPV's drew the year before the Network debuted is going to be significantly less than the 100% of approximately 1.3 million subscribers at $9.99, with the option to watch. So, if something isn't bringing in an adequate amount of revenue and a far cry from what it once generated, you're going to place less importance on it, in favor of something that does, without tackling the reality that the same event, PPV or Network exclusive, isn't drawing.
Of course, in the eyes of the fan, some events and some superstars have more importance than others. There's also a contingent that over analyzes who and what, in WWE, is a draw. But, in the eyes of WWE, they're in a comfortable place because nothing in WWE is a bigger draw than WWE, itself. That includes PPV's. The promotion and presentation of the Network, complete with free month trials that allows you to watch a heap of content, in addition to an upcoming PPV, for a fifth of the standard PPV fee, is proof of that.
In the end, there's less importance on the drawing quality of PPV and more importance on the drawing quality of the brand, as a whole. The Network allows WWE to keep their events in-house, without having to relinquish a significant portion of the revenue those events generate. By downplaying the concept of paying $45 to $70 per month for PPV, WWE is presenting the Network as the go to destination to watch. And while a fraction of the price, there's an increased probability of adding new subscribers, which makes the Network look like a success, while also presenting the brand as sexy enough for potential investors.