WWE has been completely transformed into Peacock, now it wants to make more content

The directors of World Wrestling Entertainment said it was the best – WWE is not a technology company. Instead of acting as a streaming service, it now wants to go back to creating content.

WWE will host a Super Bowl in wrestling this weekend with its WrestleMania event on NBCUniversal’s Peacock streaming service. It’s part of an exclusive rights agreement worth over a billion dollars repositioning a longtime entertainment firm to focus on its product and avoid streaming wars.

“After all, we’re not a technology company and we shouldn’t try that,” Stephanie McMahon, WWE’s chief executive officer, told CNBC. “We’re at our core a content company and we want to do what we do best.”

Added CFO Kristina Salen: “Everyone has a plus. There are Disney +, Paramount +, Discovery +, but not all have branded content with a large fan base like WWE. We’ve seen a huge demand for what we could offer, and we could take that money and double it and do what we do best which is pleasure. “

The focus on content creation shows a kind of counter-narrative to streaming wars in which companies create applications and services full of movies and TV shows. WWE is giving up its own streaming service and instead focuses on creating new things that people will be able to watch on Peacock.

The content game is just the beginning of WWE in this new decade as it prepares for the post-Covid world with new earning opportunities. But the future will also lead to the question of whether WWE is a smart investment and how it plans to approach greater competition that seeks to jeopardize its market share.

WWE brand CEO Stephanie McMahon from the United States speaks during the 2018 Web Summit in Lisbon, Portugal, on November 6, 2018.

Pedro Fiúza NurPhoto | Getty Images

Lessons learned

Like the rest of the entertainment world, WWE had to innovate on the go after a pandemic hit last March. The company moved events to Florida to continue working and preserve media rights. He adapted to any spectator by transferring his pyrotechnic content into a more cinematic production around wrestling matches.

“It’s like in a movie,” McMahon said after describing a longtime character of a match in the style of Undertaker Cemetery last year. “And with that, the real innovation came with investing in the Thunderdome” – a gated community built in Florida to hold events.

“We experimented with drones, piros, augmented reality that we couldn’t before, mostly because of the living bodies in the actual stands,” McMahon added. “It’s going to be a lot of testing and learning what makes sense to bring out and try different things,” she said.

The real transition of WWE began before Covid-19 when President and CEO Vince McMahon fired two critical executives in January 2020. Disputes over this change focused on seeing the future differently.

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 move away from traditional pay-per-view. But WWE failed to increase subscriber numbers, reaching about a million in the United States. In addition, the company came out with another failed professional start-up start-up with XFL.

WWE dismantled its U.S. operations by early 2021 and signed a contract with Peacock. The move offers Peacock subscribers live WWE events and a classic wrestling library.

“It’s a big win for WWE,” said media rights expert Dan Cohen. “The price is going down, so you’re hoping subscribers and eyeballs will increase. They’ve come out of the technology space and don’t have to constantly maintain and update technology that changes every minute.”

Salen, Etsy’s former CFO, was one of two new executives hired in 2020. She helped Etsy enter the market in 2015 and is now partly responsible for WWE’s financial future, including more merchandise, e-commerce and corporate sponsorships , which will have new campaigns with longtime partner, Procter & Gamble.

In its fourth-quarter report for 2020, WWE said it suffered $ 84 million and earned $ 238.2 million in revenue. But even though WWE hosted most of the fanless events last year, it still grossed $ 970 million thanks to Fox Corp.’s rights fees. and NBCUniversal.

WWE currently has a market capitalization of approximately $ 4 billion and is trading at approximately $ 55 per share. Salen said the WWE network didn’t lose money, but again, its consensus on the C-Suite was focused on increasing licensing fees around its content and to stop working like Netflix.

“Just as we were the first to pay per impression, first directly to the consumer, and now we are the first to return to aggregators,” Salen said. “We thought it was the right time. And over the next few years, we’re pretty sure we’ll be proven right.”

Salen said in response to an inquiry she often receives from Wall Street: Why should investors be interested in WWE shares?

“Investors know that I choose to spend time in places where I ultimately think value should be created,” she replied. “I think there’s a huge opportunity in the next few years to create more value for shareholders.”

No worries about competition

WrestleMania 37 is scheduled for this weekend at Raymond James Stadium, the site of the Super Bowl LV of the National Football League, which takes place in February.`

It is paid to 25,000 fans, and McMahon said the event will mimic many of the NFL’s Covid-19 protocols – seat pods, mask distribution, hand sanitizer. “It’s just that the configuration is different because we can have people down on the floor,” she added.

WWE still needs to return to the arena, and perhaps more than professional leagues. The company generates a significant portion of its revenue from live ticket sales and travels more frequently throughout the year.

“As soon as the arenas open for business, we can start turning it around,” Salen said. “But we need to have a critical mass of arenas open to business to be able to do that. And we just don’t see it now.”

WWE also needs to oversee another company looking to enter its market share. WarnerMedia’s Turner Sports estate has invested in wrestling with All Elite Wrestling (AEW). The network last hosted a large wrestling company in 2001 when it owned wrestling at the World Championships (WCW), which WWE bought.

AEW is run by Tony Khan, the son of National Football League team owner Shahid Khan, and has financial support. And so far it has been receiving praise for its production.

“The theater is good,” Cohen said. “The quality is good. Where AEW is lacking, it is in great power.”

Internet chatter suggests that WWE will spend money to prevent AEW from accomplishing that mission. Asked about this, Salen said the rumors were not true. She added that AEW represents more competition for its NXT property. This division is like the NBA G League for wrestlers.

“We’ve always had competition, it’s part of the game,” Salen said. “Internally, let’s pay a lot more attention to Game 7 of the World Series and if Raw goes against it.”

Chairman of World Wrestling Entertainment Inc. Vince McMahon (L) and wrestler Triple H appear in the ring during the WWE Monday Night Raw show at the Thomas & Mack Center on August 24, 2009.

Ethan Miller | Getty Images Fun Getty Images

What is the future of WWE?

But while WWE could once again stop a significant challenger, it cannot stop the future. And among the main questions he faces: How long will Vince McMahon remain in the position of CEO? And who will replace him?

His daughter suggested that it would be a collaboration of “institutional knowledge” that makes decisions when her father decides to step down.

“No one has all that experience and expertise and passion in building and growing this company from a smaller regional company to this amazing company that is developing today,” McMahon said.

Asked to describe the future of WWE in the long run, McMahon used the company’s slogan. “It sums it all up about WWE,” she said. “It is: then, now and forever.”

Data Disclosure: Peacock is a transmission service of NBCUniversal, the parent company of CNBC.

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