Credit for the coverage goes to Jason Powell
WWE Conference Call – Features lots of WWE Network News
Michael Weitz of WWE investor relations kicked off the conference call and read through the legalities.
-Vince McMahon thanked the investors for sticking with them as they figured out the best direction for WWE Network . He said they came close to going with other models, but he feels they now have “the right model.” He stressed that they are not advocating that anyone “cut the cord” and are instead giving their clients and alternative. “Our audience will be blown away by the way you can actually use our network ,” McMahon said. Vince said the network will increase television ratings for USA “or whoever we are with.” He said that what is good for WWE is good for everyone in the aggregate.
-Vince turned the call over to Barrios, who read through the presentation. He stressed that network subscribers will get “a scheduled network” and an on-demand option . He added that they will get “never seen” footage and a personalized VOD (video on deman) recommendation based on their viewing behavior. Barrios said online viewing is expected to overtake traditional television viewing over the next few years.
-Barrios noted that the $9.99 price tag is comparable to other “over the top” models such as Netflix, Hulu Plus, etc. He said their numbers tell them that 41 million homes have an active WWE fan. He said passionate WWE fans spend the most time consuming online video and are most likely to be the early subscribers.
-Barrios ran through the basics of the network , including launch date and the previously advertised content. He also spoke about partnering with MLB Advanced Media, plus he stated that they have engaged Harte Hanks to provide “best-in-class customer service.”
-Barrios ran through the economic factor and said the hope is that the phase one countries generate incremental OIBDA of $25 million to $85 million.
-The listed goal is for WWE Network to attract “at least one million subscribers” by the end of 2014. A second quarter 2014 goal is to produce a live daily studio show. They hope to “initiate launch” in the UK, Canada, Australia, New Zealand, Singapore, Hong Kong , and the Nordic countries (though early 2015 is also listed as an option ). They opened up for questions from callers.
-A caller questioned the idea that the network will increase viewership for USA and Syfy. He noted that they will also replay some of the content on the network. He questioned how the network would not be cannibalistic. Vince stressed that the key is that Raw is live . “It’s the live value that means that much to them,” he said. He stated that USA Network also believes this will increase television ratings. “It will increase the overall awareness of WWE exponentially,” Vince said. He stressed again that it’s not just a WWE view, but also a USA Network view.
-Barrios noted that they are in the exclusive window of negotiations with USA Network and hope to have an announcement regarding their next television deal in April.
-Barrios said MLB is providing a service for WWE. He noted that it’s not an equity participation.
-A caller asked if they have thought about trying to bundle the service. Barrios said they thought about a variety of models and believe this is the best route. He said they are tiering their content with live programming and then a second tier via WWE Network .
-The same caller asked if they have considered giving WWE live event ticket buyers a free subscription to the network and other cross promotion. Barrios said they are not going to give away all their secrets. He stressed that they will be giving away one week of WWE Network for free. Vince jumped in and stressed that the free week will not be a pay-per-view week.
-The next caller questioned the research of the fan base and what percentage demonstrated an affinity to pay for something like the network . Barrios said that is listed in the presentation, and he noted that they did a lot of testing on the price point. Vince said the positive response to WWE Network has been overwhelming.
-The caller asked why people can’t sign up for the network now. Barrios mentioned “contractual gymnastics.” He said one of the downsides is that people are going to be champing at the bit to sign up, but they feel this is the best way to go.
-Vince said they remain hopeful that their normal pay-per-view providers will continue to carry pay-per-view events. The caller asked for an update on what the pay-per-view carriers are saying. Barrios noted what DirecTV said, but said he didn’t want to get into all of it and that they will continue working and talking with the carriers.
-Barrios noted that if they get to the two to three million subscriber point they will be investing heavily in the content.
-The next caller questioned why they are comfortable with the cannibalization up to $60 million. He asked whether a subscriber could sign up for six months, get WrestleMania and all the other pay-per-views and contents, and then cancel. Barrios said that in theory they could. He said he has confidence in the way they execute. He said he’s had the benefit of playing with live prototypes and he can’t believe that once people have access that they will want to back out.
-A caller noted that the numbers they have laid out do not include sponsorship. Barrios said that is correct, but noted they have some creative ideas.
-A caller asked if they will consider a discounted lengthier subscription . He also asked about potential pay options for chats with stars, etc. Barrios noted that the network will be available in gift form. Barrios said the second screen app for the network will be the best around and stressed that they are the best value in entertainment “and that goes with the $9.99.”
-A caller asked how they reached the $9.99 price point. Barrios said they did a lot of testing. He said they regularly ask how they can give their customers more value. He said they also considered how much content and came to that number. The caller asked if they worry that they have lowered the value of their own content by going with the number they did. “Not at all,” Barrios said.
-There were no further questions, so Weitz closed out the conference call.
