The Great Leap Forward

Hype (or, more accurately, over-hype) is an integral part of the business of professional wrestling.  Perhaps a nod to its carnival roots, the overzealous promotion of the next top talent, important card, or story development is the lifeblood of the industry.

So, when the WWE proclaimed a few weeks ago that a “major” announcement would “change the WWE forever,” you can forgive me if my expectations were, uh, measured.

But the announcement delivered exactly what was promised.  And then some.

WWENetworkLaunchTechnology has already fundamentally transformed the music industry in less than a generation, technology is in the process of quietly killing the movie industry (or at least the movie theater industry), and technology’s revolutionary impact on the television industry is inevitable.

It’s that latter point that has caused me to wonder for the past several years what the next “version” of television is going to look like.  It is a foregone conclusion that TV is about to change on a fundamental level.  But what will that change look like?  What will rise from the ashes of the broadcast / cable model that has existed in some form since the 1970s?

Last week may have provided our first glimpse of it.

My argument has been that television as we know it will cease to exist inside of a decade or so.  Why?  Because instant, on-demand content is now a cultural expectation of the generation that will make up the bulk of the core entertainment demo for the foreseeable future.

The internet, DVR, and Netflix have all conspired to alter the desires of consumers irrevocably, such that antiquated notions like “lead-ins,” “network cross-overs,” or even “commercials” start to seem obsolete.

The exception to that rule is live television.  Live events (particularly sports programming) still command large audiences.  Those audiences don’t have the ability to fast-forward through advertising so long as they’re watching live.  As such, my contention for the last several years has been that everything that isn’t news or live programming will shift to an on-demand model, and all that will remain for traditional television would be live programming.

What I didn’t know was who would be the first network or entity to commit fully to such a model.  To do so would require a loyal fanbase that would be dedicated enough to accept programming in a new format, probably via a new delivery system.

It turns out that trailblazer will be World Wrestling Entertainment.

The company announced last week the launch of the rebooted WWE Network.  Conceived as just another cable channel when originally announced a few years ago, the re-imagined Network will exist as an app that will provide on-demand and live programming—including pay-per-views—for only $9.99 per month.

The benefits of such a deal are obvious.  As a fan who orders five or six PPVs per year, the amount that I spend on those events under the current pay structure is more than double what I will pay as a WWE Network subscriber—and I’ll get the other six or seven PPV to boot.

Put simply: Double the PPVs, half the price.

The WWE Network will also feature archives of every WWE, WCW, and ECW pay-per-view ever, as well as Netflix-style original programming.  In addition, there will be pre- and post-shows for RAW and Smackdown, as well as the two flagship shows themselves.

The technology behind WWE Network will be provided by the same company that runs MLB.TV, a product about which I’ve raved in the past.  As I began to think about that, I realized that the two services are almost identical, appearances aside.

But only one of them is truly revolutionary.

By way of analogy, MLB.TV is the Xerox Star.

WWE Network is the Apple Macintosh.

Other than the front-end interface, which will obviously be much different, the same basic structure applies.  Think about it like this: Despite all the window-dressing, there are only two kinds of digital content.  Type “A” is archived content.  Type “B” is streaming live.

For MLB.TV, all live games are Type “B,” becoming “A” after their conclusion.  As a subscriber, I can go back and watch any game from this entire season at the press of a button.

For the WWE Network, they will begin with a huge cache of “A” content, while continuing to generate “B” content on a weekly basis in the form of their live shows.

Here’s where things get interesting:  Even if you add up the runtime of every archived PPV the WWE currently promises will be part of WWE Network at launch, that adds up to something like 1,000 hours of footage.  By contrast, MLB.TV archives every baseball game from a given season.  Taking into account the fact that MLB.TV includes both the “home” and “away” broadcasts of every non-national (i.e. Fox, TBS, or ESPN) game, that means that MLB.TV has well over 7,000 hours of content each year, perhaps over 10,000 hours.

The point is that the architecture is in place for WWE (if it chooses) to put much, much more of its library into this service.  This will likely take place over a period of years, as fans become used to the eye-popping initial features of the WWE Network.

Whether they stick to the $9.99 across-the-board price point, or create a “premium” tier a year or two from now, it’s not unthinkable that WWE could incrementally add every Monday Night RAW, every Smackdown, and every WCW Monday Nitro in the years to come, and still have plenty of room to spare on the WWE Network’s servers.

In the live content department, it’s easy to imagine WWE also incorporating never-before-seen elements to entice subscribers.  One hypothetical example might be to show one WWE house show Live event as a Network exclusive each month.

All of that is an exciting, scary prospect for die-hard wrestling fans.

And let’s talk about that price point for a second: One of the reasons this is such a huge story, and not just in the wrestling world, is that WWE has decided to introduce this service at a price that is affordable for most fans.  More importantly, the other contenders to be the first to create this type of media platform—the NFL, HBO, UFC, ESPN—would have done so at a much higher “a la carte” price.

This is crucial.  The fact that the WWE is not only the first to create this kind of service[1], but has also introduced it at such a low price, stacks the deck in the WWE’s favor for the foreseeable future.  Here’s what probably happens from this point: About a million subscribers sign up at launch, immediately bolstering WWE’s financial stability (which was already solid).  UFC continues to dominate PPV buys, except WrestleMania, but, as the years pass, this increasingly seems like dominating VHS sales while WWE has begun selling DVD.

UFC will have to decide whether to follow WWE into similar territory and expand its “Fight Pass” service, or to cling to the old model as technology slowly erodes consumers in favor of the new structure.  The dilemma faced by UFC will mirror the one other sports leagues and cable channels looking to go a la carte will face.  Namely, they can either stick it out with cable providers, which won’t be ideal, or they can jump into a WWE-Network-like venture.  If they choose the latter option, they’ll have a further problem of either trying to match a price point that is unsustainable for almost everyone (except WWE), or coming in at a higher price point and risk angering fans who know how much the WWE is delivering for ten bucks per month.

Eventually, cable companies stop carrying WWE PPV altogether, but, again, WWE doesn’t care.  By that point, the WWE has established a truly independent content delivery system that isn’t dependent upon cable providers.  That allows WWE to keep its profit margins the same or better, while passing along the savings to the consumer.

On top of that, having this new media outlet will help WWE leverage an even better television deal.  Whoever winds up being the WWE’s TV partner will know going in that the WWE’s need for television will be diminished by the WWE Network, and will only continue to wane over the life of the deal.  The best guess here is that WWE will get a sweetheart of a deal that will probably be a long-term arrangement at the behest of the television outfit that strikes the bargain.

When people talk about Vince McMahon being a genius or a visionary, that, too, often seems like puffery.  But it isn’t.  This latest move should solidify the WWE’s financial and broadcasting status for another generation, as other companies try to match what McMahon’s WWE is about to do.

It won’t be easy.


[1] It’s maybe fair to say that MLB.TV is technically the “first” to do this, but MLB has a distinctive feature that isn’t true of WWE.  Namely, the primary appeal of MLB.TV is that fans can watch games that aren’t in their market.  WWE is a national company.  So, the goals of MLB.TV are very different than those of a product playing to a unified, national audience.  Still, MLB.TV pioneered the technology.

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1 Response to The Great Leap Forward

  1. Pingback: Where Does WWE Go From Here? | The Axis of Ego

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