The WWE’s annual biggest event of the year is today as Wrestlemania 32 takes place at AT&T Stadium in Dallas, Texas. This year, the WWE Network is offering a free month including this today’s event. The strategy seems to be contrary to WWE’s goal for profit but at least one analyst believes its a positive calculated risk.
Interesting enough, in 2013 pre-WWE Network, the WWE raised its PPV price point to $70. In 2016, you can access the WWE Network for free and watch the company’s biggest day of the year.
The ability to watch Wrestlemania for free through its Network is not a secret, in fact the WWE has been aggressively marketing it on social media using the #FreeWrestlemania and #WhatAreYouWaitingFor hashtag.
In a post by Brandon Ross, on the BTIG web site, he evaluates the WWE’s risk of giving away the event for free and how it might impact the company’s business.
First off, for those not familiar, the WWE offers its Network for $9.99 per month. However, it continually runs a promotion in which new subscribers may access the network for free for one month with the hope that the subscribers likes what they see and continue on with the network. Also, now former subscribers (previously purchased the network and want to re-up) can access a free month if they have never previously taken advantage of the free month promotion. There has been criticism about this program since it is fairly easy to take advantage of the system by basically using a new email address. The article indicates that the WWE has tightened its authentication system to prevent this from happening.
Despite the distinct possibility that the WWE would be losing profits from its Network by giving away Wrestlemania, Ross believes that it is a “smart, calculated risk” for three reasons. First, he likes the idea of free trials as it’s a way for a potential subscriber to “test drive” the product. Second, most of the U.S. fans have tried the network and those that have previously subscribed to the WWE and are coming back are paying. Third, in international markets the WWE advertises the network via social media and the company should leverage its presence to promote the network to international fans.
While there are inherent issues with a free trial for a month, the WWE reported strong conversion rates in its first two trials. It has not reported conversion rates since the first two but the inference here is that if the “free month” was not successful in converting subscribers then it would not continue with the promotion.
The question of “churn” is always a question with the network. Chris Harrington has done an excellent job in following the quarterly churn. In its quarterly calls, WWE has announced a total subscriber number but the number has to be analyzed a bit to determine the amount of new subscribers versus those that discontinued their subscription. Ross indicates that while it is unknown whether the WWE will announce its total subscribers, paid subscribers or both that they will be interested in the total number (free and paid). The total number, according to Ross, will provide insight into the “longer-term opportunity of the network” as opposed to the paid subscriber number. Ross estimates that the Network should hit over 1.8 million subscribers when looking at free and paid combined for Wrestlemania.
Payout Take:
The WWE’s strategy to allow the possibility of fans to access the Network to watch Wrestlemania for free is a risk as Ross identifies. In comparison, the UFC allows a 7 day free trial for its Fight Pass digital platform. However, returning subscribers that have cancelled Fight Pass and want to renew do not have the opportunity for the free trial again. The shorter time frame to sample the product plus the tighter restrictions seems like the better strategy to capture the maximum amount of potential revenue for its platform. Although no numbers are available, it appears that Fight Pass is doing better than the WWE. This could be attributable to the broad availability (domestic and international) of Fight Pass. UFC is coming off one of its most successful days for Fight Pass with UFC Fight Night 84 from London. Again, no numbers since the UFC is private, but you may infer that the company picked up a lot of subscribers for the event. Also, Fight Pass offers three distinct tiers to subscribe with the less expensive tier being an up-front payment for 12 months. So, instead of the WWE’s model of paying while you go, the UFC will get the money first even if you tail off from watching.
The WWE actually embraces the opportunity to promote a free Wrestlemania. One would believe that it is hoping that its vast social media assets will appeal to the international markets that have yet had the opportunity to watch the network. Also, you would think that its conversion rates are acceptable at this point that it is willing to give away the most-watched event of the year for the company.
We will see how the numbers turn out.
Fight Fan says
Honestly this WM is one of the weakest cards they’ve had in years. Hopefully this helps.
Wil says
Havnt watched WWE since the 90s I wouldnt even know who is still out there or who were the new entertainers on the scene