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Have the British been bulldogged? WWE Network still fails to launch in company’s second largest market
The launch of World Wrestling Entertainment (WWE’s) online video streaming service was postponed indefinitely in October 2014, with still no sight of a resolution.
The network stalled in WWE’s largest international market, the UK. Accounting for $36m (7.1%) of 2013 revenues, it should be one of the company’s prime targets for the network and a source of reliable subscription growth. However, in November 2014 the company announced that the UK launch had been delayed indefinitely 20 minutes prior to the launch date with no explanation given. This could be the result of on-going legal proceedings with current UK distributor BSkyB or technical difficulties, but is an unwelcome obstacle to achieving the 1 million mark by the end of 2014. There had been speculation BSkyB may become involved in a deal similar to the Canadian pay channel set-up between WWE and Rogers Communications.
WWE’s recent financial performance has seen net income shrink and the share price perform below its peers’ average. Further, the company’s traditional methods of distribution have lost ground against the subscription services, with cable and satellite customers falling while online subscription services such as Netflix go from strength to strength. Another significant proportion of WWE revenue comes from home entertainment sales, and some incumbents have enjoyed success with the transition to streaming. The WWE network was launched in January 2014, and has spread to 170 countries available through a plethora of mediums.
Wrestling has one of North America’s largest and most loyal followings, and the company has shown it is capable of adapting to new platforms and market trends and monetizing them, selling the brand across multiple channels. The company will gain direct subscription revenues and advertising too. The network has an advantage in that the company already has hundreds of thousands of hours of content available with both current and historical matches across a variety of defunct brands to entice both current viewers and old. The threat of a substitute should present a better negotiating position with broadcasters over television rights, and has the infrastructure and options to diversify content to entice more viewers to their particular brand of entertainment.
The move is not without difficulties. The network needs at least one million subscribers to break even, and growth stalled in Q3 2014. The reaction of broadcasters has also not been favourable; some have equivocated on airing PPVs and may have been behind the delay in the UK market. The move online is brazen as it is entering a more competitive market with incumbents outgunning the company financially. Finally, not every move the company has made has been successful; Chairman Vince McMahon has attempted to diversify before with limited success. With the online subscription offering lower revenues, it may also be a case that the company cannot attract staff via wages, undermining the brand in an already competitive environment. WWE may be one of the most lucrative in the wrestling industry but it is still outclassed by other areas such as NFL and film entertainment.
McMahon has personally apologised to the UK and insists the company is working day and night to bring its service as soon as possible. However, further delays will continue to damage the brand and may scupper chances for international growth the network needs to be sustainable.