World Wrestling Entertainment executives said it was for the best – WWE isn’t a technology company. Instead of working as a streaming service, the company now wants to start creating content again.
WWE will host the Wrestling Super Bowl this weekend with its WrestleMania event on NBCUniversal’s Peacock streaming service. It’s part of a $ 1 billion exclusive rights deal that is repositioning the longtime entertainment company to focus on its product and avoid the streaming wars.
“Ultimately, we’re not a technology company and we shouldn’t try,” Stephanie McMahon, WWE’s chief brand officer, told CNBC. “At our core, we are a 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 following like WWE. So we’ve seen that there is a huge demand for that what we have to offer. ” and we could take that money and double it and do what we do best that is satisfied. “
The focus on content creation shows a kind of counter-narrative to the streaming wars where companies create apps and services that are loaded with movies and TV shows. WWE foregoes its own streaming service and instead focuses on creating new things for people to watch on Peacock.
The content game is just the beginning for WWE in this new decade as it prepares for a post-Covid world with new revenue opportunities. But the future will also raise questions about whether WWE is a wise investment and how it will approach increased competition that will threaten its market share.
Stephanie McMahon, WWE Chief Brand Officer from the United States, speaks during the Web Summit 2018 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 March. The company moved events to Florida to continue operations and secure media rights. It did not adjust to any audience by switching its pyrotechnic-filled content to a more cinematic production centered around wrestling matches.
“It’s like being in a movie,” said McMahon after describing the cemetery ‘longstanding Understaker-style character last year. “In addition, the real innovation was the investment in the Thunderdome” – an indoor complex built in Florida for events.
“We’ve been experimenting with drone cameras, pyros, and augmented reality that we couldn’t have done before, mostly with living bodies in the actual stands,” added McMahon. “It’s going to be a lot of testing and learning what makes sense, imagining and trying different things,” she said.
The real transition from WWE began before Covid-19 when Chairman and CEO Vince McMahon fired two critical executives in January 2020.
In 2014, former WWE Co-President George Barrios saw value in the company’s new streaming service. It cost $ 10 a month and helped the company deviate from the traditional pay-per-view system. But WWE failed to grow its subscribers and hit about a million in the US. In addition, the company left another failed pro football startup, the XFL.
WWE phased its US operations from 2021 and signed a deal with Peacock. The move offers Peacock subscribers live WWE events and a classic wrestling library.
“It’s a huge win for WWE,” said media law expert Dan Cohen. “The price is going down and you are hoping subscribers and eyeballs will rise. You are out of the tech realm and you don’t have to keep waiting and updating the technology, which is changing every minute.”
Salen, the former CFO of Etsy, was one of two new executives hired in 2020. She helped Etsy go public in 2015 and is now partially responsible for WWE’s financial future, including other merchandising, e-commerce, and corporate sponsorship deals that will be new to campaigns with long-time partner Procter & Gamble.
In its fourth quarter 2020 report, WWE said it had $ 84 million in success and had $ 238.2 million in revenue. Although WWE hosted most of its events last year with no fans in attendance, thanks to rights fees from Fox Corp. and NBCUniversal still made $ 970 million.
WWE currently has a market capitalization of around $ 4 billion and trades at around $ 55 per share. Salen said the WWE network hadn’t lost any money, but his consensus in the C-suite was again focused on increasing royalties on its content and ceasing operations like Netflix.
“Just like we were first with pay-per-view, first with direct-to-consumer, and now we’re the first to use aggregators again,” said Salen. “We felt it was the right moment. And over the next few years we are pretty confident that we will prove to be right.”
Salen said a query she often receives from Wall Street: Why should investors be interested in WWE stock?
“Investors know that I spend my time in places where ultimately the value needs to be created,” she replied. “I think there is a tremendous opportunity in the next few years to create more value for shareholders.”
Don’t worry about competition
WrestleMania 37 is slated for this weekend at Raymond James Stadium, where the National Football League’s Super Bowl LV takes place in February. “
25,000 fans are expected to show up, 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 get back to the arena, however, and maybe more so than the pro leagues. The company generates a significant portion of its revenue from selling live tickets and travels more frequently throughout the year.
“As soon as the arenas are open we can start,” said Salen. “But we have to have a critical mass of arenas that are open to business so that we can do that. And we just don’t see that right now.”
WWE also needs to monitor another company that wants to capture its market share. WarnerMedia’s Turner Sports property has reinvested in wrestling with All Elite Wrestling (AEW). The network last hosted a major wrestling company in 2001 when it owned World Championship Wrestling (WCW), which WWE had bought.
AEW is run by Tony Khan, son of National Football League team owner Shahid Khan, and has financial backing. And so far it has been praised for its production.
“The theaters are good,” said Cohen. “The quality is good. But where AEW is missing, there is star power.”
Internet chatter suggests that WWE will spend money to keep AEW from accomplishing this mission. When asked, Salen said the rumors were incorrect. She added that AEW is more of a competition for its NXT property. This division is like the NBA’s G League for wrestlers.
“We’ve always had competition, it’s part of the game,” said Salen. “Internally, we’re paying much more attention to Game 7 of the World Series and whether Raw is up against it.”
World Wrestling Entertainment Inc. Chairman Vince McMahon (L) and wrestler Triple H perform in the ring during the WWE Monday Night Raw show on August 24, 2009 at the Thomas & Mack Center
Ethan Miller | Getty Images Entertainment | Getty Images
What is the future of WWE?
While WWE could hold back a major challenger yet again, it can’t hold back the future. And to the most important questions: How long will Vince McMahon be CEO? And who will replace him?
His daughter suggested that it would be a collaboration of “institutional knowledge” that makes the decisions if her father decides to step aside.
“Nobody has all of this experience, expertise and passion in building and growing this company from a smaller regional company to the incredible growth company it is today,” said McMahon.
McMahon was asked to describe WWE’s future long term, using the company slogan. “It sums up everything about WWE,” she said. “That means: then, now and forever.”
Disclosure: Peacock is the streaming service from NBCUniversal, the parent company of CNBC.