Thursday, January 9, 2014

How the WWE Network Could Change Television Forever

The WWE announced last night that it would be starting a streaming service for $9.99 a month. With it, they are creating exclusive content and make it possible for fans to stream a huge variety of content from the past. The biggest news about the service is that it will also stream all of WWE's PPVs. Since a PPV runs about $50 these days, a fan who buys two PPVs is nearly at the break even point, and a fan who purchases three would be crazy not to sign up for the service.

It makes a ton of sense for the WWE. Instead of sharing profits with the cable company, WWE takes home everything. Yes, there's more overhead, but I'm someone who has not bought a PPV in a while, but will strongly consider this package as it makes a lot of sense. I believe there are a lot of fans who pick and choose PPVs, especially those who only care about WrestleMania, Royal Rumble, and maybe SummerSlam or Money in the Bank. Even if they are only getting those first two, it makes sense to purchase this service.

WWE is consistently ahead of the curve when it comes to utilizing technology, and I can definitely see others following their lead in the future. The first company that comes to mind is the UFC. These are very similar companies in that they both have monthly PPVs with a fan base that will pick and choose depending on how the main events look. The UFC recently introduced an on-demand service for classic fights which is one large part of what the WWE service looks like. However, it seems like the current service only appeals to hardcore fans. They would get a huge uptick in sales if they were willing to add in the PPVs with the service. They could also up the cost of the service to make it more financially appealing, but I do think this business model has potential.

Finally, I may sound ignorant on this last part, as I am not sure how the money is split between production companies and cable providers, but on demand movies is another place where this could be an option. Instead of paying $6 a movie, a $15-$20 service that included all new movies may be financially viable to increase revenue.

If those options all follow the WWE's lead, what is PPV left with? Boxing and pornography. The porn numbers have to be down with how easy it is to stream pornography from a variety of websites. And boxing has 1-2 fights a year that actually get mainstream press coverage. I don't know how or why the PPV model exists at that point. It's something that appeals to a niche audience, and that niche may be shrinking by quite a bit.

Although I think it is a far ways down the road, this may also be the end of cable companies bundling channels. People are getting more and more comfortable with technology, and with smart TVs, it will be very easy to use your big screen TV as an internet device without having to plug in a computer. Why not just pick and choose what you want. Sure, you may pay a premium to have that option, but by not paying for hundreds of channels you never watch, many people would still come out ahead. Outside of channels that show sports, the only channels that I really need off the top of my head are FXX and Comedy Central. I'm sure there are plenty of people who have similar tastes.

Even though the WWE only appeals to a small part of the population, this was actually very big news for anyone who watches television as it cold have a domino effect that changes the way everyone consumes television.



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