Perhaps the executives of World Wrestling Entertainment put it better: WWE is not a tech company. Instead of operating as a streaming service, it now wants to go back to content creation.
WWE will host the Wrestling Super Bowl this weekend with its WrestleMania event on NBCUniversal’s Peacock streaming service. It’s part of a more than $ 1 billion exclusive rights deal that reposition the longtime entertainment company to focus on its product and avoid streaming wars.
“At the end of the day, we’re not a tech company and shouldn’t be trying to be,” WWE Brand Director Stephanie McMahon told TUSEN. “We’re a core content company, and we want to do what we do best.”
Kristina Salen, CFO, added: “Everyone has a plus. There’s Disney +, Paramount +, Discovery +, but not everyone has branded content with a huge fan base like WWE. So we saw that there was a huge demand for what we had to offer, and we could take that money and double down and do what we do best, which is contentment. “
The emphasis on content creation shows a sort of counter-narrative to the streaming wars where companies are building apps and services loaded with movies and TV shows. WWE is ditching its own streaming service and is instead focusing on creating new things for people to watch on Peacock.
Content play is just the start for WWE in this new decade as it prepares for a post-Covid world with new earning possibilities. But the future will also pose questions about whether WWE is a smart investment and how it plans to approach more competition that wants to threaten its market share.
WWE Chief Brand Officer Stephanie McMahon of the United States speaks during the 2018 Web Summit in Lisbon, Portugal on November 6, 2018.
Pedro Fiúza | NurPhoto | Getty Images
Like the rest of the entertainment world, WWE had to innovate on the fly after the pandemic last spring. The company has moved events to Florida to continue operations and safeguard media rights. He adapted to the absence of spectators by shifting his pyrotechnic content to a more cinematic production around wrestling matches.
“It’s like a movie,” McMahon said after describing longtime character The Undertaker’s graveyard-style match last year. “And on top of that, the real innovation came from investing in the Thunderdome” – an indoor complex built in Florida to host events.
“We experimented with drone cameras, pyros, augmented reality that we couldn’t have done before, mainly because of living bodies in the real stands,” McMahon added. “It’s going to take a lot of testing and learning what makes sense to come up with and try different things.”
WWE’s real transition began before Covid-19 when President and CEO Vince McMahon fired two critical leaders in January 2020. Discussions around this change centered on a different vision for the future.
In 2014, former WWE Co-Chair George Barrios saw the value of the company’s new streaming service. It cost $ 10 per month and helped the company move away from traditional pay-per-view. But WWE failed to increase the number of subscribers, reaching around 1 million in the United States. Additionally, the company left another failed professional football start-up with the XFL.
WWE Network has dismantled its US operations to begin 2021 and has signed with Peacock. The move provides live WWE events and a classic wrestling library for Peacock subscribers.
“It’s a big win for WWE,” said media rights expert Dan Cohen. “The price is going down, so you’re hoping that subscribers and eyeballs will go up. They are out of the tech space and don’t need to maintain and update technology that changes every minute. ”
Salen, Etsy’s former CFO, was one of two new executives hired in 2020. She helped Etsy go public in 2015 and is now partly responsible for WWE’s financial future, including more merchandising. , e-commerce and corporate sponsorship, which will include new campaigns with long-time partner Procter & Gamble.
In its Q4 2020 report, WWE said it suffered a blow of $ 84 million and had a turnover of $ 238.2 million. But although WWE ran most of the fanless events last year, it still made $ 970 million through Fox Corp’s tariffs. and NBCUniversal.
WWE currently has a market cap of around $ 4 billion and trades at around $ 55 per share. Salen said the WWE Network hasn’t lost any money, but again, his C-Suite consensus focused on increasing licensing fees around its content and shutting down activities like Netflix. .
“Just like we were the first to pay on sight, first direct to consumers, and now we’re the first to come back into aggregators,” Salen said. “We felt it was the right time. And over the next few years we’re pretty confident we’ll be right.”
Salen said in a survey she often receives from Wall Street: Why should investors be interested in WWE stocks?
“Investors know that I choose to spend my time in places where, at the end of the day, I think there is value to be created,” she replied. “I think there is this tremendous opportunity over the next few years to create more shareholder value.”
No worries about the competition
WrestleMania 37 is scheduled this weekend at Raymond James Stadium, the site of the National Football League’s Super Bowl LV in February.
It has 25,000 fans attending, and McMahon said the event will mimic many of the NFL’s Covid-19 protocols – seat pods, mask distribution, hand sanitizer. “Only the configuration is different because we can have people on the floor,” she added.
WWE needs to return to the arenas, however, and perhaps more so than the professional leagues. The company makes a significant portion of its revenue around live ticket sales and travels more often throughout the year.
“As soon as the arenas are open for business, we can start to change things,” said Salen. “But we need there to be a critical mass of arenas that are open for business for us to do that. And we just don’t see that right now.”
WWE also needs to watch another company that wants to eat into its market share. WarnerMedia’s Turner Sports property has reinvested in wrestling with All Elite Wrestling (AEW). The network last hosted a large wrestling company in 2001, when it owned World Championship Wrestling (WCW), which WWE bought.
AEW is run by Tony Khan, son of national football team owner Shahid Khan, and is financially supported. And so far it is more and more appreciated for its production.
“Theaters are good,” Cohen said. “The quality is good. Where AEW lacks, however, is in the star power.”
Internet chatter suggests that WWE will spend money to prevent AEW from accomplishing this mission. Asked about it, Salen said the rumors are not accurate. She added that AEW is more competitive for its NXT property. This division is like the NBA’s G League for wrestlers.
“We’ve always had competition, that’s part of the game,” said Salen. “Internally we pay a lot more attention to a World Series Game 7 and if Raw comes up against it.”
World Wrestling Entertainment Inc. President Vince McMahon (left) and wrestler Triple H appear in the ring on WWE Monday Night Raw at the Thomas & Mack Center on August 24, 2009
Ethan Miller | Entertainment Getty Images | Getty Images
What is the future of WWE?
But while WWE may once again retain an important challenger, it cannot stop the future. And among the big questions he faces: How long will Vince McMahon be CEO? And who will replace him?
His daughter, Stephanie, suggested it would be a collaboration of “institutional knowledge” that would make the decisions when her father decided to step down.
“No one has all this experience, expertise and passion to build and grow this business from a small regional business to the incredible growing business it is today,” she said.
When asked to describe WWE’s long-term future, McMahon used the company’s tagline. “That sums it all up about WWE,” she said. “It is: then, now and forever.”
Disclosure: Peacock is the streaming service of NBCUniversal, parent company of TUSEN.