Although WWE has got off to a creatively shaky start in 2015, financially it's another story. Between November's #freefreefree promotional campaign, rolling out the WWE Network service in the United Kingdom and Republic of Ireland markets, and the always bankable Royal Rumble special, WWE reversed the trend of sluggish subscriber growth from mid April to late October 2014, and finally hit their short term target of getting one million subs for their online channel in late January, only a few weeks behind schedule.
WWE followed this up on Thursday by reporting better than expected financial results for the last quarter of 2014. Although they made a small net loss for the quarter of $1.6 million, largely due to a $1.5 million film impairment charge related to the expected performance of their movie Oculus, this comfortably beat Wall Street's pessimistic predictions based on bigger losses earlier in the year. Particularly impressive was the 19% revenue growth in the quarter compared with Q4 2013, thanks to the WWE Network and increased television rights fees.
Perhaps jumping the gun a bit, Vince McMahon is once again being hailed as a genius by many financial analysts, less than a year after they publicly skewered him for overhyping and under-delivering on a new domestic TV rights deal with NBCUniversal.
Indeed, Mike Ozanian of Forbes is even heralding WWE and Vince McMahon as the future of sports thanks to their early adoption of an over-the-top digital distribution model and proving that such a business model can work:
"Give McMahon credit for having the guts to go against conventional wisdom and critics who wanted WWE to stick exclusively with its pay-per-view model. McMahon has looked Joseph Schumpeter‘s creative destruction theory in the eye and smiled right back. It takes you know what to take a profitable business model and rip it apart, but that is exactly what McMahon has done...Over-the-top is what will drive the WWE Network’s growth and is the wave of the future."
It's guaranteed that the WWE Network will drive the company to record revenues in 2015, but whether that will translate to record profits remains to be seen. To reach those heights, WWE would need to average over 1.4 million Network subscribers for the year as a whole, which seems out of reach as things stand now.
Nonetheless, the business praise Vince McMahon is currently receiving still led to WWE's stock price shooting up again by 24% over Thursday and Friday, closing the week on $16.59 a share, its highest level since May 15th, 2014.
Personally I expect the stock to continue to rise over the next few months, as growth in WWE Network subscriptions should be strong in both February and March, thanks to another free promotional month that is currently underway and WrestleMania 31 peaking interest in the WWE product, as it does every year.
The key challenge for WWE management will be to keep the subscriber growth going over the rest of the year, as any declines in Network subs will likely impact on their stock price badly. If WWE continues to promote in a fashion that rubs their hardcore fans the wrong way and doesn't generate more Network programming that engages the more casual fan, then a #CancelWWENetwork trend could become a reality and most definitely won't be good for business. Until Vince McMahon successfully grapples with that problem, it's far too soon to be hailing him as a marketing genius again.