Forbes Reveals Details About How WWE Network Was Created and its Value

Popular financial outlet Forbes has delivered an in-depth profile interview with Vince McMahon, a large portion of which is centered around the creation of the WWE Network.

The article mentions how WWE was initially planning to launch the network around 2011 when the first promos began airing on television. It was planned to be a cable channel, similar to MLB Network or NFL Network, with specialized programming that would air around the clock. But this would prove to be problematic, according to the outlet.

“But McMahon claims that model was only going to generate an anemic 20 cents per month per subscriber, roughly on par with third-tier networks like MSNBC and Bravo, $0.21 and $0.24 a month, respectively (almighty ESPN commands an astronomical $5.54 a month). So he walked away.”

McMahon then turned to something else that had been reported by many sources, but decided on the web streaming.

“The next plan for the network followed a pay-channel model (like HBO), but again McMahon didn’t like deals he had in place. So in true wrestling fashion, WWE kicked out of them in 2012 and began exploring the over-the-top strategy. The phenomenal success of Netflix, which now has more than 44 million subscribers, inspired WWE to seek a model that went directly to its biggest asset: its passionate fan base.”

But then there is also the issue of how much of an investment WWE has made into the project, and moreover, what it will take to get any return.

“Allowing for the cannibalization of its existing pay-per-view customers (which WWE estimates could be as much as $60 million a year), the company needs 1 million subscribers to break even. At 2 million subscribers WWE projects adding $50 million to its EBITDA. At 3 million that number jumps to a robust $150 million.”

It also give a bigger insight into what WWE is projecting for the network, even when there are doubters.

“While the WWE has yet to release how many subscribers it has to date, two longtime wrestling observers estimated that at least 250,000 signed up for the service on the first day, which would put the company well on its way to the million it needs to break even. One analyst recently predicted the WWE could even exceed its own goals and acquire 6 million to 8 million subscribers.”

And Intrepid portfolio manager Jayme Wiggins is one of those.

“The network ‘is a slam dunk for a die-hard fan,’ which Wiggins estimates to be a core of 700,000, ‘but I don’t think it’s going to be easy for them to get another 500,000.’”

The rest of the article can be found here.

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