The success of the WWE Network is contingent on attracting new subscribers to the WWE Network as well as retaining existing customers.
Beginning Sunday, August 24, customers who signed up on WWE Network's launch day will eclipse their initial six-month commitment period.
Thus far WWE executives have been unwilling to share internal projections on WWE Network subscriber churn. We have no idea how many subscribers will choose to stick with the WWE Network and how many will let their subscriptions lapse.
On the second-quarter conference call, Chief Financial Officer (CFO) George Barrios would not answer analyst Mike Hickey's question on what percentage of subscribers had signed up for auto-renewal.
Many were surprised by the revelation in the recent financial results that 128,000 WWE Network subscribers had already cancelled during the April to June period. Executives classified this cancellation activity as the "payment billing driven element of churn."
This leaves WWE in a tough spot. While the company has accelerated the launch of the global WWE Network, will it be able to attract enough new subscribers to offset the customers that are leaving due to non-renewal and payment issues?
Will changes to the WWE Network service make the project a successful endeavor?
Fumbles on the initial projections
When the WWE Network was initially announced, many had sky-high projections for potential audience.
Analyst Laura Martin of Needham & Company released a report in April which projected the WWE Network would grow to $216 million by 2015 and $336 million by 2016. Robert Routh, National Alliance Capital Markets director of equity research, was quoted in a February Fortune.com article that he believed the WWE Network could attract "6 to 8 million subscribers" in the long-term.
That sort of optimism may help explain why the WWE stock dropped 20 percent when WWE announced its post-Wrestlemania WWE Network subscriber numbers were only 667,287.
There were some analysts who held more conservative estimates of the potential audience for the WWE Network. For instance, in a Forbes article in March, Intrepid Capital Management's portfolio manager Jayme Wiggins accurately estimated the core of the WWE Network to be about 700,000 subscribers. He noted he "didn't think it’s going to be easy for them to get another 500,000.”
With more than one-in-seven subscriptions for the domestic WWE Network have already cancelled before the WWE Network was even six months old, everyone in WWE knows it's imperative it grows the WWE Network quickly.
Strategy for growth
On May 1, during the first-quarter conference call, CFO Barrios told investors in order to attract more subscribers they would execute a "five-part strategy:"
- Creating new content
- Entering new geographies
- Expanding distribution platforms
- Developing new features
- Executing high-impact marketing campaign
Evaluating the Strategy of the WWE Network Roll-out so Far
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