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Disappointing subscriber numbers and exciting expansion plans for WWE Network revealed in second quarter financial report

The just released second quarter 2014 earnings reports for WWE are out, including the much anticipated updated number of WWE Network subscribers.  That figure is 700,000.

It is up from the 667,000 they announced the day after WrestleMania 30, but well below the projections that observers believed they should have in order to reach their stated goal of one million subscribers by the end of calendar year 2014.

Analysts and fans weren't expecting the number to be good, with hopes pinned on a number in the neighborhood of 850,000.  This is obviously well below that, and we'll see how the markets react later today and in the coming weeks.

While the number will be the focus of most of the discussion on the street and among fans today, there are some interesting and promising details included in th body of the reports:

  • Existing subscribers are engaged and happy with the product. On average, 91% of subscribers access the network at least once a week and via 2.5 devices. In addition to that hard data, consumer research indicates that 90% of subscribers are satisfied with WWE Network, including 51% who are extremely satisfied and 39% who identify as somewhat satisfied.
  • International expansion is imminent. The plan is to make the existing version of the Network available in over 170 countries and territories, including Australia, New Zealand, Hong Kong, Singapore, Mexico, Spain and the Nordics on August 12th. The U.K, launch is targeted for October of 2014, with plans for Italy, UAE, Germany, Japan, India, China, Thailand and Malaysia to be announced later.  All of these countries will receive the over-the-top distribution model currently deployed in the U.S.
  • The Network will be a cable pay channel in Canada. WWE has entered into a new 10-year partnership with Rogers Communications to launch WWE Network as a traditional a-la-carte Pay-TV channel in Rogers' cable systems with a preview beginning August 12 and thereafter through other Pay-TV providers. The partnership also renews Rogers' license for Raw and SmackDown, and gives them the distribution rights to pay-per-views.
  • New payment plans. There will now be options to pay $19.99 per month with no commitment to renew, and a one-time payment option on the existing $9.99 per month plan that requires a six-month commitment
  • Content and deliver developments. In addition to The Monday Night War series that was already previewed, there will be a second documentary-style series called WWE Rivalries coming soon.  WWE Network is launching on several smart TVs and Blu-ray players in mid-August. An enhanced feature,  "resume play", will debut later this year.

  • George Barrios, Chief Strategy & Financial Officer, is quoted on the future of the Network as saying:

    As we expanded WWE Network to 700,000 subscribers, our earnings performance surpassed our guidance, which targeted a Net loss ranging from $15 million to $18 million. Our key metrics continued to show strength as average North American attendance increased 11%, representing the fourth consecutive quarter of year-over-year growth. Raw and SmackDown TV ratings increased 5% and 3%, respectively, marking SmackDown's 7th quarter of growth among the past 8 quarters. We identified efficiencies across WWE, which include a 7% reduction in staff, and improved our 2015 OIBDA outlook by $30 million. We developed plans to make WWE Network available in over 170 countries, and entered a 10-year deal that provides for the WWE Network launch as a traditional a-la-carte Pay-TV channel in Canada and renews our television licensing agreement for Raw and SmackDown. The progress in our strategic initiatives reinforces our view that successful execution of our WWE Network strategy can generate meaningful economic returns.

    The conference call will follow later this morning, and we'll have details from that, reaction from insiders and investors and plenty of analysis.

    Initial thoughts, Cagesiders?

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