Whutchu Gonna Do Brotha!!!?
August 5, 2008. That is the date of the last time shares of WWE have exceeded 1 million in a single day. Today is January 24, 2011. Today WWE announced they lowered their guidance on the quarter. In a week or so they will issue their quarterly results to shareholders. As a shareholder, I’m not surprised by the turn of events. The product right now is a joke. They have been in the PG era phase for quite some time (thanks mostly to Linda McMahon’s failed campaign attempts). Why they haven’t gone back to the Rated R era is beyond me. It seems it doesn’t take a rocket scientist to realize that the stock and the product aren’t doing well under the current philosophy.
The product is slowly but surely going away unless something big happens. People thought the catalyst would be TNA. However, people don’t understand that TNA is nothing like the WCW (WWE’s former competition and what mainly led to Monday Night Wars – and consequently a rise in WWE and the going public of WWE stock).
NXT is not the answer. In fact, the entire show is so unwatchable that a 2 or less rating is not uncommon anymore. A rating of 2 was unheard of when the Rock and Stone Cold ruled Monday Nights. John Cena and Randy Orton are getting old. HHH is supposed to be the future of the company as far as ownership but he isn’t looking so healthy right now.
The biggest problem is the failing business model. Similar to what happened to the record industry for music. People aren’t buying the ‘retail’ version of the product (PPV’s or CD’s), and are instead downloading (streams or mp3). There is a way out though for WWE. They could instead offer the PPV like iTunes does for a cheaper price to be played on people’s computers. However, it is hard to gauge if that will work because you will need to figure out the price of what people will buy. I know that they aren’t interested in paying the current $44.95 to $50 + (Wrestlemania) for 3 hours of show that resembles an above average Monday Night Raw show.
Here are some recent 2010 buy rates for the more popular PPV’s the WWE puts out monthly:
Royal Rumble 462,000 (up from 450,000 in 2009)
Elimination Chamber 285,000 (up from No Way Out's 272,000 in 2009)
WrestleMania 26 885,000 (down from 960,000 in 2009)
Extreme Rules 182,000 (same as Backlash 2009)
Over The Limit 197,000 (down from 228,000 for Judgment Day 2009)
Fatal 4 Way 143,000 (second lowest # PPV buys in history; down from Extreme Rules 2009's 213,000 buys)
WWE dropped The Bash completely, last year it drew 178,000 buys
MITB 165,000 (last year's NoC drew 267,000)
SummerSlam 350,000 (down from 369,000 last year)
Night of Champions 165,000 (similar to Breaking Point's 169,000 last year)
Hell in a Cell - Over 200,000*** [last year drew 300,000]
Bragging Rights - Under 150,000*** [last year drew 200,000]
Survivor Series - ~240-250,000*** [last year drew 235,000]
TLC - ??? [last year drew 228,000]
*** = preliminary number from Corporate.WWE.com
We'll assume TLC gets the same buyrate as last year.
In the first 6 PPVs of 2010, WWE are 151,000 buys down compared to last year.
In the last 6 PPVs of 2010, WWE are 265,000 buys down compared to last year.
WWE dropped having 2 PPVs in June.
So in total, WWE are over 600,000 buys down from last year!
Let’s put that into financial perspective at $45 a PPV ticket (rounded up for ease of calculation and the fact that Wrestlemania is generally more):
$45 x 600,000 = $27,000,000
That is some serious money lost. My question though isn’t about why 600,000 people decided not to buy. My question is to the other millions that did.
Bottom line, the WWE can turn itself around and use technology to their advantage. They will need to realize that people aren’t going to spend $40+ to watch a 3 hr show that is not that much better than their ‘free’ weekly shows. I just wonder if Vince took too many Stone Cold stunners to realize what to do before it is too late…