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WWE fights back on over-the-top network, challenges critics of venture

World Wrestling Entertainment missed its target of 1 million subscribers to the WWE Network, its over-the-top digital content service, by the end of 2014. Its stock remains far below levels of investor exuberance seen following the initial announcement of the network at last year’s International Consumer Electronics Show.

But as WWE Network this week hits the one-year anniversary of its launch, company executives remain convinced they not only made the correct decision to create the service, in turn reshaping its entire media strategy, but that it will continue to grow substantially. WWE Network, costing $9.99 per month, offers all of its series of pay-per-view specials that typically cost $60 each on television, a well as 3,000 hours of available video-on-demand content.

In recent filings with the U.S. Securities & Exchange Commission, WWE said it did hit the 1 million subscriber mark on Jan. 27, four weeks behind its original target. But more substantively, total revenue from the company’s media division grew 12 percent in 2014 to $340 million, blunting some initial investor concerns that the OTT service would cannibalize WWE’s existing pay-per-view and linear TV businesses. And in recent weeks, WWE Network in particular has struck a number of international distribution agreements that have made the service available in 177 countries (see chart).

“There’s not really any existing playbook for a direct-to-consumer digital offering like this,” said Michelle Wilson, WWE chief revenue and marketing officer. “But we’ve done some things that have worked, and we feel really good about where we are. What we’re talking about is a complete reorientation of our media businesses.”

The first year of deployment for the WWE Network did require some tweaks along the way. It dropped last fall an initial required commitment of six months, making the ability to join or quit any time more like Netflix. WWE also offered a free month of service in November for new subscribers to remove barriers to entry.

But since the creation of the WWE Network, a wide array of other major content programmers and sports properties have announced or debuted similar OTT ventures, including ESPN, the NFL, HBO, CBS and Disney, suggesting that WWE’s role as a trailblazer in this space has not been fully appreciated.

“This is a business that requires constant attention and commitment. You can’t just launch, say thanks, and call it a day,” said Bob Bowman, MLB president of business and media. MLB Advanced Media provides the video streaming infrastructure for WWE Network, and Bowman is a former WWE board member. “But they’ve continued to build the product and grow it, and for them to get to a million subscribers in this short period of time, it is an incredible milestone.”

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