WWE Building Its Case to ‘Cut the Cord’

Yesterday, WWE released its Q2 2017 results. For those unfamiliar with quarterly reports like this one, just understand that this is like WWE getting a check up from an economics doctor.

A couple of the highlights include revenue increasing 8% to a record $214.6 million and the WWE Network averaging more than 1.63 million average paid subscribers over Q2 2017, which represented an 8% increase from the Q2 2016.

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What’s more interesting though, is the decline of RAW and SmackDown viewership. While this may sound concerning at first, it’s not. More people are consuming WWE than ever, they just aren’t doing it through traditional avenues like cable.

Instead, fans are going online and consuming via social media. The numbers are staggeringly in WWE’s favor for them to switch from television to an exclusively digital platform i.e. the WWE Network.

Chuck Carroll of CBS Chicago wrote a great article explaining all of the elements at play.

“…The videos posted on WWE’s digital platforms, including Facebook and YouTube, were viewed more than 9.1 billion times during the first six months of the year — an increase of nearly 20 percent from the same time last year. Likewise, WWE’s social media channels continue to explode and now have 800 million followers,” he wrote.

Even though the network is growing, all of the free trials WWE is handing out around WrestleMania did not turn into permanent subscriptions.

“And then there is the company’s own over-the-top digital channel. The WWE Network averaged more than 1.6 million paid subscribers during the second quarter of the year, which is an 8 percent year-over-year increase. Total subscriptions, including first-timers receiving a free trial period, nearly topped 2 million around WrestleMania in April. However, only a small fraction transitioned to paid subscribers once the trial period expired,” Carroll added.

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Carroll underlined how much money WWE makes in their TV deal with NBC, but noting that one day going totally digital may be the more attractive option.”Make no mistake about it, television rights fees are WWE’s bread and butter, and generate more income than any other division in the company. It’s not even close. The company’s second quarter earnings show television is responsible for $60.1 million in income, compared to $13.9 from the WWE Network. The content posted to social media and YouTube generated less than $1 million,” Carroll pointed out.

“But here’s where it gets interesting. Although the new revenue streams pale in comparison to television, they are growing at an exponentially faster rate. Network revenue is up 85 percent year-over-year while digital media is up 1,300 percent. However, digital media growth must also be taken with a grain of salt, given its small numbers and negative income in 2016. Regardless, it points toward the future of media consumption,” he continued.

Millions of Americans are “cutting the cord” and getting rid of their cable in favor Hulu or Netflix. WWE could join the trend and have all of their programming air exclusively on the WWE Network. Before that happens they’re going to need nearly quadruple the number of Network subscribers. It’s a tall task but one thing is for certain, never bet against Vince McMahon.