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MR. TITO STRIKES BACK - WWE Listened to Fans on Daniel Bryan/Wyatts and the Economics of WWE Network
By Mr. Tito
Jan 14, 2014 - 1:12:58 AM
The "Excellence in Column Writing" has returned! Fascinating night on RAW. Ever since SummerSlam 2013, we, the WWE fans, have fought the good fight. The WWE kept telling us that Randy Orton is the big star that they wanted to push. However, the fans kept demanding Daniel Bryan. That is despite years upon years of the WWE piling on bullshit onto Bryan including attempting to completely sabotage his babyface reaction since SummerSlam. Not only was it jobbing to Randy Orton, but it was becoming Bray Wyatt's ****. WWE had big plans for "Daniel Wyatt" that would have probably gone into Wrestlemania.
But the fans kept at it... They did not give the reaction to the Wyatt Family as the WWE thought it would have. Then, by chance, the Michigan State basketball team hyped its fans with a HUGE "YES!" that was actually featured on ESPN's Sportscenter. In my opinion, that segment on ESPN turned heads in the WWE Corporation's board room and also backstage in WWE Creative meetings. You see, it's not me, Mr. Tito who is eating crow or taking back any "Daniel Bryan is buried" comments. It's the WWE Management reversing course on Bryan!
That lack of reaction to Randy Orton tonight in his match against Kofi Kingston, along with no heat for attacking John Cena's father (again - 3rd time now, according to my reader, @themasething) came on the same night where the fans, once again, chanted "YES!" for their favorite wrestler Daniel Bryan. And thankfully, the WWE shredded its long-term booking to COURSE CORRECT Daniel Bryan's character. He's a babyface that's the most over in the company right now, and that includes John Cena.
If you go from SummerSlam 2013 through before RAW tonight, I was 100% correct. We got Randy Orton instead of Daniel Bryan as WWE Champion while Daniel Bryan has had to endure a midcard feud with the Wyatt Family. Almost 5 months of character damage.
And Daniel Bryan still has the Ohio Valley Wrestling "Class of 2002" in the way for any long-term WWE Title hopes. We'll see how he does against Batista, Brock Lesnar, John Cena, and Randy Orton. Even if tonight extends into a Royal Rumble 2014 win, he still has those 4 wrestlers to overcome. Good luck and I'm betting John Cena gets payback for losing to Bryan at SummerSlam.
But sure, enjoy the night and enjoy mentioning me repeatedly in comments. I enjoy it about as much as another columnist trying to use me for heat. Hey, I'm all for charity and getting attention.
Besides - If I'm wrong on Daniel Bryan's "burial" and he truly gets pushed like a main event superstar during 2014, I'll be happy. He's clearly over despite what WWE management wants to deny and he deserves it. But like I said, Orton, Cena, Batista, and Lesnar are all in the way...
- The plan all along was to turn Daniel Bryan on The Wyatt Family but it was more of a longterm plan until things changed and they did the big angle on RAW. There wasn’t any kind of great debate or big decision making regarding turning Bryan back this week.
Source: Wrestling Observer Newsletter
How do you like them apples?
Now, onto the WWE Network...
In my opinion, it's an economic homerun for the WWE. Not only will it save the WWE in the long-run from the declinig Cable/Satellite TV industry, but it's going to grant them revenue possibilities that they've never seen.
As it stands now, the WWE is losing out on revenue that they could be making off its fanbase. Internationally and with piracy, the WWE has lost money or just simply left money on the table. Particularly here in the United States, I believe the WWE set their Pay Per View prices too high and has enticed many of its fans to illegally stream the Pay Per Views instead. WWE fans pay $59.95 (more in HD) for Wrestlemania and $44.95 for non-Wrestlemania Pay Per Views. That's $554.40 without tax included. That's a chunk of money, particularly when the non-Wrestlemania/Royal Rumble/SummerSlam Pay Per Views run the risk of being low in quality. Higher prices and lower quality have driven many to illegally stream international feeds of the WWE Pay Per Views.
Speaking of those international feeds, there are many parts of the world where Pay Per Views are received for free (or at least on their Cable packages). There's more revenue lost.
Consider this... The average non-Wrestlemania Pay Per View can do up to 200,000 per show. WWE makes about $100 million on those shows while pulling in almost another $60 million on Wrestlemania alone. That is great money for the WWE, particularly for just airing a show that packs about 20,000 paid fans in attendance (more for Wrestlemania, of course). However, the non-Wrestlemania shows are declining. You could argue that the fanbase is smaller, but the WWE has held steady at about 4 million per edition of RAW for a while now. I believe that piracy has killed WWE's Pay Per View market and if not, it's the high prices set by the WWE. If you have a choice between buying a UFC event and a WWE show... Your income is limited.
Let's make a grand assumption... Let's assume 1 million buy the WWE Network in Year One. The annual cost for WWE Network is about $120 per person. Do the math... $120 million in WWE Network revenues.
Now, you'll lose many of your 200,000 per month loyal buyers of WWE Pay Per Views along with a diminishing Wrestlemania number. The days of 1,000,000 Wrestlemania buys are over unless you technically count a WWE Network subscriber as a buy. Loyal WWE fans who have bought the WWE Pay Per Views are going to see a HUGE bargain in the WWE Network and laugh at the money saved by paying $120 annually for what they once paid over $500 for. But the WWE Network's motives are not only to cater towards loyal fans, but to make people start paying for shows again and bringing back many older fans.
Piracy is killing the Pay Per View market and both WWE and UFC know it. Both of them have supported anti-piracy measures in Congress and both are now electing to stream their big events for a lower price rather than sticking with the old PPV model. If you go back to 2003-2004, the WWE did 300,000-450,000 buys regularly. Now, the WWE celebrates 250,000 as a successful non-Wrestlemania Pay Per View. That is a ton of revenue lost on the Pay Per View market that the WWE has been forced to use price increases in attempts to subsidize those loses. I'm willing to bet that the last round of price hikes pushed fans out of the market and into the arms of illegal streaming websites. Hope you guys have great malware protection!
If you take the top part of 2003 with 450,000 buys with the top of 2013, besides Royal Rumble (did an awesome 579,000 buys!), 245,000... You're seeing a runoff of about 200,000 fans who would rather not buy monthly WWE Pay Per Views now as opposed to 10 years ago. If you were to simply convince that 200,000 to pay $120 per year on the WWE Network, you have $24 million in new revenues that weren't possible until the Network was created. If you add my 1 million year-one subscribers plus the 200,000 lost Pay Per View customers, we're getting closer to the current Pay Per View revenues.
I still believe that you'll make money off of the traditional Pay Per View market, even with the WWE Network. Wrestlemania does above or around 1 million buys per year. It's like the Superbowl to wrestling fans and many friends gather around a television to watch the show each year. With the WWE Network in place, 800,000 buys is still possible. Not everyone will buy the WWE Network and many like to watch Pay Per Views on their big HD screen (like me). It's not much cost to the WWE to have Pay Per Views because again, the live show gate always draws them money.
But I believe the WWE Network has greater potential elsewhere... Though it won't begin until 2015, the WWE Network will also be available to international markets. WWE is an American company and though it distributes its products well, it does not grant the access to events and videos as it does here in the United States. The WWE Network changes that and actually makes international fans pay the monthly fee as well. Before, their international carrier might give them a Pay Per View for free (or part of their Cable/Satellite), but now, they are a paying customer.
The older fans are where it counts. By having a backlog of older WWE, WCW, and ECW Pay Per Views available on-demand, older fans might be enticed to relive the "glory days" of the late 1990's when 3 legitimate wrestling companies existed. If the WWE can use the older content to entice viewership of the newer content, major win by the WWE. It will be very interesting to see if the WWE will offer the current editions of RAW and Smackdown soon after the air on television. If so, then that's huge for the WWE Network. After checking out an old WCW show, an older fan might see the current RAW available and watch it. Then they get hooked.
What's overlooked on the WWE Network is how the on-demand Pay Per Views could actually boost the overall value of World Championship Wrestling (WCW) and Extreme Championship Wrestling (ECW). For a while, I seriously thought that the WWE would take an accounting impairment for the diminishing WCW brand. 2013 proved that older fans are out there and are flush with cash. WCW based Blu-Rays/DVDs sold well during 2013 and many were in the WWE's top videos of 2013. If you're someone like Sting, you better watch what the WWE Network could do for your legacy and WCW career. Years upon years of avoiding the WWE Corporation, the WWE Network might be something to entice many older names out of the woodwork. Did you see how excited Steve Austin was for the Las Vegas presentation?
We'll have to see what the WWE does through March 2014 for its television deal. They've positioned their shows to all expire at the same time with Comcast/NBC/Universal. They could use the WWE Network as a bargaining chip like "hey, we don't need you", but the WWE Network is still new and needs some promotional help on Cable TV/Satellite broadcasts. In my opinion, staying home with Comcast/NBC/Universal is what should be done by the WWE. Nobody takes care of you better like USA Networks and the WWE witnessed firsthand on how rough Viacom can be. But I believe that the WWE needs to re-sign with Comcast/NBC/Universal in order to get the WWE Network not only up and running, but at a lower cost...
WWE needs to play nice with Comcast. In order for these streaming channels such as Netflix or WWE Network to work, they need the internet providers to not jack up rates for bandwidth used. If you are a Comcast internet customer, you know what I'm talking about for their tiers of "high speed internet". I believe that the tiers of different speeds will continue as a growing trend in the cable modem industry and additional bandwidth costs may be applied. Streaming video just eats up bandwidth and you could imagine how overwhelmed the WWE Network's servers could become during Pay Per View nights when everybody is streaming it live at the same time. Ouch!
By kissing Comcast's ass and remaining on their channels, they can lobby for Comcast to not screw its customers (further) with additional internet costs associated with streaming video. Furthermore, they can convince Comcast to keep carrying WWE Pay Per Views on Cable TV. Rumors are already swirling that DirecTV is not happy about the WWE Network and might opt to eliminate WWE Pay Per Views its service. By cozying up to Comcast, the WWE not only lobbies to keep internet prices stable or reasonable, but retains Pay Per View availability on Xfinity Cable offered by Comcast. That's why I believe that the WWE returns to Comcast/NBC/Universal with only Smackdown having a chance to be shopped around to another channel.
It's a changing entertainment world and the traditional forms of media such as physical discs or Cable/Satellite are all dying off. Meanwhile, streaming videos onto your Smartphones or Tablets keeps growing and growing and growing... Thankfully, the WWE got ahead of this and created the WWE Network online instead of a Cable TV channel that no provider was willing to pick up. The WWE, in the long-run, will make major revenues off of this network by fixing its Pay Per View issues, bringing back older fans, and just delivering a grew new product that is actually innovative.
Will I buy it?
I will buy the WWE Network if and only if I like the WWE Creative direction heading into Wrestlemania 30. Fans should do the same... Certainly, it's nice that the WWE gives you many of the older shows and Pay Per Views, but the new product needs repairs. Anytime you can push a guy whom the wrestling fans are burned out on, Randy Orton, and not the guy whom they love in Daniel Bryan, that's a broken creative team running the show. WWE is too reliant on their older stars to carry the ship while not giving legitimately talented former independent wrestlers a shot.
If we head into Wrestlemania 30 and the show is bad... Then the aftermath following Wrestlemania 30 is bad... No WWE Network for me. I'll speak with my wallet as I always have.
Comments and debates are welcome on Twitter. Bring it on. @titowrestling
SO JUST CHILL TILL THE NEXT EPISODE!
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