The WWE Network was supposed to change the way we watched TV. More importantly for the company, it was supposed to be a financial boon, and all at just $9.99 a month — a price the WWE mentions so often during its programming that the audience has learned to chant it on cue. Unfortunately for Vince McMahon and Co., however, that price-tag has made a better meme than a way to turn profits. The company revealed its third quarter earnings on Thursday and just like the previous one, the WWE lost money. Per the Wall Street Journal:
[The] company said it swung to a third-quarter loss of $5.9 million, or 8 cents a share, from a profit of $2.4 million, or 3 cents a share, a year earlier.
If there’s a bright side, though, the WWE’s latest loss is considerably less in the second quarter when it reported losses of $14.5 million. And the $5.9 million dip pales in comparison to the hit the company took in May when the WWE lost $350 million in one day.
One of the financial woes plaguing the company is the WWE Network, which continues to fail in meeting its subscriber goals. As of Sept. 30, there were 731,000 subscribers to the WWE Network, according to a company press release. That’s far below the projected goal of signing up “1 million to 2 million subscribers by year-end 2014,” as a company statement predicted when the WWE network launched in January.
The Wall Street Journal further parses the subscriber base:
WWE Network currently has 703,000 subscribers in the U.S. and another 28,000 abroad. The majority of those subscribers signed up during the first month of the WWE Network. In the third quarter, the company reported a net addition of 31,000 subscribers after 255,000 subscribers dropped the service when their initial six-month commitment was up.
In an effort to boost subscriptions, the WWE announced it is dropping its requirement that first-time subscribers commit for a six-month period. Now, customers will be able to pay $9.99 in single installments, and those who sign up now will get November free.
“To capitalize on the substantial opportunity created by WWE Network, it’s time to remove all the barriers to those that want WWE,” Vince McMahon said in the press release. “We are excited to introduce a new simplified price plan at $9.99 per month, and like Netflix with no commitment/cancel anytime. This reflects our belief in the broad appeal of WWE Network content.”
The problem with this plan, however, is that unlike Hulu and Netflix, there is not really a “broad appeal” to the WWE Network’s content, which, as one might deduce, is all wrestling related. Not even every wrestling fan is interested in subscribing, as one can still get a fill of WWE programming at least twice per week on network television. (By the way, WWE programs, including “Raw” and “Smackdown,” are still bringing in many millions of dollars for WWE, according to the third-quarter report.)
Probably the biggest appeal of the non-committal strategy going forward will be wrestling fans getting to pick and choose the pay-per-views they want to watch — $9.99 is much cheaper than the $50 to $60 price tag cable companies charge currently for special shows, such as WrestleMania and the Royal Rumble. With that in mind, though, the results of the new strategy might not be clear until those two high-profile pay-per-views air next year.
That might be why along with the new non-committal model, the company is also offering subscribers who sign up on Oct. 31 the month of November free, which McMahon announced via YouTube.
“We know sampling will be a big part of this business,” WWE’s chief strategy and financial officer George Barrios told the Wall Street Journal.
Despite the less-than-ideal news, however, WWE executives remain optimistic about the WWE Network’s future. Later in November, the company will be making the WWE network available in the United Kingdom as the next step in its international roll-out.
“WWE Network continues to be the single greatest opportunity to transform WWE’s business model,” McMahon said. “And we remain optimistic about our potential to drive long-term growth.”