WWE News WWE NEWS: WWE announces Network plans - sort of - and says non-WM PPVs would shift to Network, when will it launch?
Feb 28, 2013 - 7:51:59 AM
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By James Caldwell, PWTorch assistant editor
Along with releasing Fourth Quarter 2012 & Year-End 2012 earnings results on Thursday, WWE separately announced a "Business Plan and Potential Path to Significant Earnings Growth."
The "business plan" revolves around revenue growth generated by the "potential launch of a WWE network," which they are pricing at $12.99-$14.99 per month on a subscription basis.
Most of the Network discussion in the press release is a re-statement of what WWE said last quarter, but there are some additional new nuggets such as acknowledging the proposed plan to move all non-WrestleMania PPVs to a Network and a separate item on potentially "licensing content to established TV networks."
Again, though, WWE did not identify a firm launch window for the Network. The key line buried deep in the press release reads: "If a network is launched within the year," then WWE expects to incur significant costs "as the initial ramp in subscribers and revenue is not likely to be sufficient to offset the incremental, direct expenses associated with a network launch, such as marketing, program amortization, and transmission costs."
WWE noted the Network initiative "if successful, could generate substantial returns. However, they contain significant execution risks." The "risk" involved is WWE "increasing content production for distribution on various platforms, including the potential creation of a WWE Network."
As a result, WWE will continue to invest heavily in its "production and creative capabilities." The plan runs through 2015, which includes the ongoing run-up to a proposed launch, getting the launch off the ground, and then supporting the Network in its initial stages once it launches.
WWE CEO Vince McMahon offered his opinion: "We believe we can achieve a significant increase in earnings based on launching a WWE network in the U.S. and international markets, leveraging the renewal of our largest content agreements, and developing digital products, such as mobile games and gamification of content, which take advantage of our presence online and in social media.”
Some of the key items identified in the "business plan," as it relates to the Network:
- WWE plans to use three approaches to expanding their content distribution: licensing WWE content to established networks, potentially launching WWE Network through "traditional cable" distribution, and monetizing content through "alternative digital distribution." WWE said they plan to use all three options in combination.
- Specific to the Network, WWE says they believe the "premium subscription model" is the "best approach." WWE said they believe they can attract "between 2 and 4 million subscribers." This is based on their research on whether people will subscribe to a service that includes non-WrestleMania PPVs "as well as compelling original content."
WWE says they would offer the Network at $12.99 to $14.99, which they estimate would provide $125-$250 million in additional annual revenue. (In 2012, WWE reported $484 million in revenue.)
- WWE is targeting "a base of approximately 1 million subscribers" once the Network launches.
- WWE says that in order to meet their "business proposal" goals, "it is critical" that WWE "invest in key areas, including talent development, content creation, and marketing." As a result, they are not anticipating year-over-year profit growth because more money will be poured into content growth plans.
[ LINK: Full Press Release here - http://yhoo.it/13p26gs ]
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