WWE has been fully converted to Peacock, now it wants to make more content

World Wrestling Entertainment executives said it was for the best – WWE is not a technology company. Instead of acting as a streaming service, it now wants to make content again.

WWE is hosting the Super Bowl of Wrestling this weekend with its WrestleMania event on NBCUniversal’s Peacock streaming service. It’s part of a more than $ 1 billion exclusive rights deal that will reposition the old entertainment company to focus on its product and avoid the streaming wars.

“Ultimately, we’re not a technology company, and we shouldn’t try to be,” Stephanie McMahon, WWE’s chief brand officer, told CNBC. “We are a content company at our core and we want to do what we do best.”

Chief Financial Officer Kristina Salen added, “Everyone has a plus. There’s Disney +, Paramount +, Discovery +, but not everyone has branded content with a huge fan base like WWE. and we could take and double that money and do what we do best, which is content. “

The focus on content creation shows a kind of counter-story to the streaming wars in which companies create apps and services that are full of movies and TV shows. WWE is shutting down its own streaming service and instead focusing on creating new things for people to watch on Peacock.

The content game is just the beginning for WWE in this new decade as it prepares for a post-Covid world with new revenue opportunities. But the future will also raise questions as to whether WWE is a smart investment and how it plans to approach more competition looking to threaten its market share.

WWE US Chief Brand Officer Stephanie McMahon speaks at the 2018 Web Summit in Lisbon, Portugal on Nov. 6, 2018.

Pedro Fiúza | NurPhoto | Getty Images

Lesson learned

Like the rest of the entertainment world, WWE had to innovate on the fly after the pandemic hit last March. The company moved events to Florida to continue operations and retain media rights. It adapted to no spectators by transferring the firework-filled content to a more cinematic production around wrestling matches.

“It’s like a movie,” McMahon said after describing the old character The Undertaker’s cemetery-style contest last year. “And besides that, the real innovation came with the investment in the Thunderdome” – an indoor complex built in Florida to host events.

“We’ve been experimenting with drone cameras, pyros and augmented reality that we couldn’t have done before, mainly because of living bodies in the stands,” McMahon added. “It will be a lot of testing and learning what makes sense to come up and try different things,” she said.

WWE’s real transition began before Covid-19 when Chairman and CEO Vince McMahon fired two critical executives in January 2020. Discussions surrounding this change focused on a different view of the future.

In 2014, former WWE Co-President George Barrios saw value in the company’s new streaming service. It cost $ 10 a month and helped the company transition from traditional pay-per-view. But WWE failed to increase subscriber numbers, reaching about a million in the US. In addition, the company left another botched professional football start with the XFL.

WWE Network has decommissioned its US operations to start 2021 and signed with Peacock. The move features live WWE events and a classic wrestling library for Peacock subscribers.

“It’s a big win for WWE,” said media rights expert Dan Cohen. “The price is going down, so you hope that subscribers and eyeballs go up. They’ve come out of the technology space and don’t need to maintain and update the technology that changes every minute.”

Salen, Etsy’s former CFO, was one of two new executives hired in 2020. She helped Etsy go public in 2015 and is now partly responsible for WWE’s financial future, including increased merchandising, e-commerce and corporate sponsorship, which are new campaigns with longtime partner, Procter & Gamble.

In its fourth quarter 2020 report, WWE said it had suffered an $ 84 million hit and earned $ 238.2 million in revenue. But while WWE hosted most of the events last year without fans, it still made $ 970 million thanks to Fox Corp. and the rights of NBCUniversal.

WWE currently has a market cap of approximately $ 4 billion and trades at approximately $ 55 per share. Salen said the WWE network has not lost any money, but again, the C-Suite consensus was aimed at rising content licensing costs and to stop operating as Netflix.

“Just as we were the first in pay-per-view, the first in direct-to-consumer, and now we’re the first to go back to aggregators,” said Salen. “We felt it was the right time. And over the next few years, we’re pretty sure we’ll be right.”

Salen said a question she often gets from Wall Street: Why should investors be interested in WWE stock?

“Investors know that I choose to spend my time in places where it is ultimately believed that value can be created,” she replied. “I think there is a great opportunity in the coming years to create more value for shareholders.”

WrestleMania 35

Source: WWE

Don’t worry about the competition

WrestleMania 37 is scheduled for this weekend at Raymond James Stadium, the site of the National Football League’s Super Bowl LV to be held in February.

It’s counting on 25,000 fans to show up, and McMahon said the event will mimic many of the NFL’s Covid-19 protocols – seat capsules, mask distribution, hand sanitizer. “Only the configuration is different because we can have people on the ground,” she added.

However, WWE has to go back to arenas, and maybe more than professional leagues. The company earns a significant portion of its revenue from live ticket sales and travels more frequently throughout the year.

“Once the arenas are open, we can start running this product,” said Salen. “But we need a critical mass of arenas open to do that. And we just don’t see that right now.”

WWE also needs to follow another company looking to eat up its market share. WarnerMedia’s ownership of Turner Sports has reinvested in All Elite Wrestling (AEW) wrestling. The network last hosted a major wrestling company in 2001 when it owned World Championship Wrestling (WCW), which WWE bought.

AEW is run by Tony Khan, son of National Football League team owner Shahid Khan, and has financial backing. And so far it is getting credit for its production.

“The theatrics are good,” said Cohen. “The quality is good. Where AEW is lacking, however, is in star power.”

Internet chatter suggests the WWE will spend money to stop AEW from achieving that mission. When asked about this, Salen said the rumors are incorrect. She added that AEW is more competitive for its NXT ownership. This division is like the NBA’s G League for wrestlers.

“We’ve always had competition, it’s part of the game,” said Salen. “Internally, we are paying a lot more attention to Game 7 of the World Series and whether Raw is going against it.”

World Wrestling Entertainment Inc., Chairman Vince McMahon (left) and wrestler Triple H appear in the ring during the WWE Monday Night Raw show at the Thomas & Mack Center on August 24, 2009

Ethan Miller | Getty Images Entertainment | Getty Images

What’s the future of WWE?

But while WWE could again hold off a major challenger, it can’t stop the future. And one of the key questions it faces: How long will Vince McMahon continue as CEO? And who will replace him?

His daughter suggested that it would be a collaboration of “institutional knowledge” that makes the decisions when her father decides to step aside.

“No one has all the experience, expertise and passion to build and grow this business from a smaller regional company to this incredible growth company that it is today,” said McMahon.

Asked to describe WWE’s long-term future, McMahon used the company’s slogan. “It sums up everything about WWE,” she said. “That is: then, now and forever.”

Disclosure: Peacock is the streaming service of NBCUniversal, CNBC’s parent company.