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Investors Wonder If WWE Network Can Sustain Growth After WrestleMania Bump

The WWE Network "has more than 1.3 million subscribers," and a 31% increase in just two months "has left investors wondering if the growth is sustainable," according to Shalini Ramachandran of the WALL STREET JOURNAL. The jump "was driven, in part, by consumers’ anticipation" of last weekend's WrestleMania 31. A free promotion in February "also helped bring in 201,000 trial customers, 77% of which converted to paid subscriptions." WWE "warned, however, that subscriber numbers are likely to slip after big events, as customers can cancel after just one month." Needham & Co. Plus Senior Analyst for Entertainment & Internet Laura Martin said that investors are "left debating how many customers will stick with the Web service" after WrestleMania. There also is the question of "how much the service is weighing on pay-per-view purchases." WWE shares "fell 15%" in the wake of yesterday's subscriber announcement. WWE estimates that it can "attract 3 million to 4 million paying customers over time." Costs involved in "launching and operating the streaming network" amounted to $120M last year and "drove the company overall to a net loss" of $30.1M, after seeing a profit in '13. WWE Chief Strategy & Financial Officer George Barrios said that he "expects costs to remain at similar levels this year and anticipates losses to shrink." Ramachandran reports WWE’s PPV buys "declined by 40% last year due to the launch of the Web network, which streams those matches live." But Barrios said that he is "confident that WWE Network’s growth can offset those losses over time" (WALL STREET JOURNAL, 3/31). Barrios said that WWE subscription growth "could be sequential or follow the seasonal cycle of its PPV business, which would 'still deliver year-over-year growth.'" The 1.3 million subscriptions is "double what WWE Network had" in April '14 for WrestleMania 30 (CABLEFAX DAILY, 3/31).

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