The WWE announced on Thursday the anticipated price point for its yet-to-be launched WWE Network. The WWE has set the monthly charge between $12.99 and $14.99 although no debut date was announced.
The WWE has decided to pursue a premium subscription model similar to HBO and Showtime in which subscribers will pay a monthly charge for the network.
Via Thursday’s WWE Earnings Call (h/t Cageside Seats):
Based on our [WWE] market research, we estimate that a fully distributed domestic pay network could ultimately attract between 2 million and 4 million subscribers at a “steady state.” These subscriber estimates derive from a projected base of approximately 47 million WWE digital TV households in the US (including lapsed fans), and the proportion of which have an affinity for WWE content, although there is no guarantee that this affinity will translate into actual subscribers. These take-rates are based on a value proposition for the network that reflects inclusion of our pay-per-view events, except WrestleMania, as well as compelling original content. Under our preferred subscription model, while our pay-per-view events would still be offered on an á la carte basis as currently available, the research indicates that a WWE network offering would drive significant consumer interest (including households that currently do not purchase pay-per-view events). At a proposed price per month between $12.99 and $14.99, this would represent incremental revenue to WWE of between $125 million and $250 million and incremental EBITDA between $50 million and $150 million.
Payout Perspective:
The key words in the first sentence of the above snippet is “fully distributed domestic pay network.” As we’ve written about in the past, distributors like DirecTV have pulled back on carrying certain networks (i.e., Pac 12 Network, Longhorn Network) due to the retransmission rights. Yet, DTV did survey its subscribers on the possibility of subscribing. If the WWE is unsuccessful in finding distribution, where does it leave it. Are the projections ambitious? With distributors seemingly tacking on additional charges monthly, can fans afford it?
It could work or it could be a huge flop.
I think it will work based on the fact that they can truly leverage the net if they own the network. They won’t be controlled by the network to limited rights/distribution online.