The WWE’s New Digital Channel Could Kill The Business Model They Built
Yesterday the WWE announced the launch of its new digital channel, and for wrestling fans, it's quite the deal: For $9.99 a month, you get a live 24-hour-a-day network that features some original content (a daily studio show and, get this, a reality TV series), broadcasts of classic WWE matches (when they were still the WWF), video on-demand access to the entire WWE, WCW, and ECW pay per view archive, and live streams of all 12 WWE pay-per-views.
The latter two are especially huge. The entire PPV library of the two major wrestling companies (along with a third indie promotion that gained notoriety in the 90s) will appeal to not just fans of current wrestling, but also anyone who’s ever watched wrestling—and that, I'd guess, makes up a pretty sizable percentage of the American male population.
But it’s the inclusion of all 12 live PPVs in the package that’s interesting, because even the worse math student on earth can figure out that getting 12 PPVs at $10 a month is a far better deal than ordering pay per views separately. Wrestlemania, for example, costs $55, while other PPVs cost $45.
Does the introduction of this package signify WWE’s plan to do away with the PPV? If that is indeed the case, it would mean the end of an era. Pro wrestling, specifically, Vince McMahon’s WWE, is widely considered the pioneers of the PPV business model (heck, payperview.com leads back to WWE.com). At its peak in the late 90s, the wrestling industry released more than 25 PPVs per year. PPV is still the method employed by boxing and UFC to deliver their content, but with the WWE – the guys who made the PPV popular – going in a digital direction, could this lead to the beginning of the end for that business model? Probably, yeah, but it's in conjunction with another seismic revenue shift: They're about to get PAID on a new television contract. The same market factors that are causing the other major league rights fees to skyrocket -- i.e. the DVR-proof nature of live sporting events -- will greatly impact WWE, whose TV deals have already virtually doubled since 2006. With their contracts all set to expire this year, the new deal(s) will make PPVs less crucial to the bottom line.