Vince McMahon is still the king of sports entertainment.
In a giant announcement this week, WWE and NBC Universal announced that the WWE Network, the pro wrestling streaming service launched nearly seven years ago, will be integrated into the NBC Peacock streaming service in March. While rumors swirled the past few years about the WWE potentially selling the pay-per-view rights to an outside service, similar to what UFC did with its PPV events, this deal essentially makes NBC the exclusive distributor for the entire WWE Network in the United States. Similar to the massive $1.4 billion contract that was inked by USA to keep Raw on the network in 2019, this streaming contract is essentially a rights fee for the network. Reportedly, the agreement is worth $1 billion over the next five years, a hefty addition to the already record-setting revenue that the pair of USA and Fox TV contracts guaranteed for the company.
McMahon rightfully has his critics and the product within the past year has been lackluster at best, but he was able to cash-in on the market share of his pro wrestling empire
Similar to how the company landed the previously mentioned mega TV deals more so because of the landscape of the TV industry with the demand of live sports that can avoid the DVR trend than the demand for sports entertainment, this deal for the Network is based more on the emerging competition for streaming dollars than the popularity of the WWE itself. Some might scoff at that since ratings have been sluggish, but those diehard fans in the “wrestling bubble” might not realize the fact that the WWE product brings a generally steady and consistent number over an extended period of time, which are the top priority in the TV business. For example, how many TV shows can draw millions of viewers on a regular basis for over two decades? Outside of The Simpsons, there are very few shows that have the longevity of WWE programming. Granted, the nature of the show is a continuous and evolving genre, but that’s one of the reasons professional wrestling, despite often being categorized as “low brow” entertainment, has remained a major staple of USA.
As I wrote in an article last week, the WWE Network could’ve faced pressure as the competition among streaming platforms continues, but this NBC announcement makes all of that moot. It can’t be understated how much of a game changer this is for the WWE, both from a marketing and financial prospective. After its launch in 2014, the WWE pushed the Network almost as much as they pushed the floundering baby face Roman Reigns character at the time in an attempt to get the service off the ground. The new platform yielded mixed results during its tenure, generating a solid revenue stream for the organization with a usual average of 1.1 million subscribers, but it wasn’t such a major success that it financially made the concept of traditional pay-per-view obsolete by comparison. I’d guess WWE brass expected more than just over a million paid customers for such an extensive library of content in the United States.
Along those lines, as I’ve discussed prior, one of the unintended effects of the $10 price tag of the network is that the writing team wasn’t forced to “sell” a show at the same level of the traditional $40 cost of an event. If the quality of the show seemed worth $10 then the standard for what’s considered “PPV quality” is lowered. With this deal, there literally isn’t any pressure on the company to “sell” the network to the fan base. Instead, they took the guaranteed cash and have none of the pressure associated with trying to maintain the subscriber number. It’s money in the bank and more importantly, more guaranteed profit for the promotion over the next five years.
For NBC, the logistics of the deal itself might not make sense based on the current WWE subscribers, but there’s a bigger picture for the media conglomerate. As mentioned, the streaming market is finding its audience and there are several platforms that look to get a piece of the pie. As much as some might cite “cord cutting” or the impending end of traditional television, standard TV will still continue to exist because it generates major ad revenue and that marketing strategy still moves products. That being said, the draw to the streaming aspect of media is based on the flexibility it gives users and the accessibility of the content. It’s less about the content itself and more about how viewers consume content. For example, live sports will still be a primarily ad genre because of the nature of a live game. On the flip side, the ability to binge watch new series is a staple of the streaming platforms.
The umbrella of NBC as a whole spans across film, television, and internet. Under the Comcast banner, there are several networks and countless entities at its disposal. That being said, NBC is in the content business and thus in competition with the numerous other networks that try to secure viewers, as well as the entertainment dollar. For example, Disney offers its bundle package with ESPN+ and consumers only have a specific “streaming budget.” Despite the ratings decline, Raw is still the staple of USA network and original programming is the biggest commodity for cable networks. The smaller channels under the NBC banner usually run older series that had a following in prior years.
The news that NBC Sports Network will shut down by the end of the year makes more sense now because it appears that NBC will essentially consolidate its content, which cuts the costs of running multiple networks. The addition of NHL and Nascar to the USA line-up will bring sports fans to the channel and obviously, there’s the opportunity to advertise the WWE Network to the demographic. Basically, the WWE Network is just a piece of a much bigger puzzle of NBC’s plan to attempt to provide more well-rounded content and thus get a piece of the pie as the distribution of media evolves within the next few years. Granted, it remains to be seen if this WWE deal is profitable for NBC, but Peacock already has an estimated 22 million subscribers so again, in the grand scheme of things, the WWE content is just a piece of the puzzle for the overall Peacock package.
Ironically, the price will be lower or even free in some scenarios for viewers of the network. An ad-supported version of the network will be $4.99 a month, while an ad-free subscription is available for the usual $9.99 a month. A portion of Comcast subscribers will already have access to the $4.99 version included in their cable package. Again, from the big picture, even those that don’t use Comcast cable or internet service can subscribe to the streaming platform so the network is indirectly a way for Comcast to generate revenue from consumers that don’t use their other services. On the flip side, for those that might consider another internet or cable provider, the Peacock platform as a whole might be another way to retain those customers, especially as cable companies look to reduce reasons for “cord cutting” in the modern era.
Economically, the numbers might work well for Peacock if they can use the added subscribers to boost their ad revenue, especially because even the included version of the WWE Network will have an ad-supported platform. However, the bottom line is, Vince McMahon just secured another billion dollars for his organization. For a comparison, Smackdown was on the air for twenty years before the show garnered the billion dollar contract for a rights fee, and in just seven years, The WWE Network with only a million subscribers signed a deal for the same amount of money. The company has a $1.4 billion contract for Raw on USA, the $1 billion contract for Smackdown on Fox, and the deal for the additional $1 billion for the Network on Peacock.
The WWE product might be stale, but how can you argue the success when the company is going to profit billions of dollars?
What do you think? Comment below with your thoughts, opinions, feedback and anything else that was raised.
Until next week
-Jim LaMotta
E mail [email protected] | You can follow me on Twitter @jimlamotta
