WWE is completely transformed into Peacock, now he wants to make more content

The directors of World Wrestling Entertainment said it was the best – WWE is not a technology company. Instead of working as a streaming service, it now wants to get back to creating content.

WWE will host the Super Bowl fight this weekend with its WrestleMania event on NBCUniversal’s Peacock streaming service. It’s part of a $ 1 billion exclusive rights transaction that repositioned the long-running entertainment company to focus on its product and avoid streaming wars.

“At the end of the day, we’re not a tech company and we shouldn’t try to be,” Stephanie McMahon, WWE’s brand director, told CNBC. “We are a central content company and we want to do what we do best.”

Chief Financial Officer Kristina Salen added: “Everyone has a plus. There are Disney +, Paramount +, Discovery +, but not everyone has content with a huge fan base like WWE. So we saw that there was a huge demand for what we had to offer, and we could take that money and double it and do what we do best, which is satisfying. “

The emphasis on content creation shows a kind of counter-narrative of streaming wars in which companies create applications and services loaded with movies and TV shows. WWE is giving up its own streaming service and, instead, is focusing on creating new things that people can 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 about whether WWE is a smart investment and how it intends to address more competition that seeks to threaten its market share.

Like the rest of the entertainment world, WWE had to innovate on the fly after last March’s pandemic. The company moved events to Florida to continue operations and save media rights. It has not adapted to any spectator through the transition of its content full of pyrotechnics to a more cinematic production around fighting matches.

“It’s like a movie,” McMahon said after describing The Undertaker’s graveyard match last year. “And, in addition, the real innovation came with the investment in Thunderdome” – an indoor complex built in Florida to host events.

“We’ve experimented with drone cameras, pyros, augmented reality that we couldn’t do before, especially because of the living bodies in the stands,” McMahon added. “There will be a lot of testing and learning what it makes sense to go ahead and try different things,” she said.

WWE’s real transition began before Covid-19, when President and CEO Vince McMahon fired two critical directors in January 2020. Discussions surrounding this change focused on seeing a different future.

In 2014, former WWE co-chair George Barrios saw value in the company’s new streaming service. It cost $ 10 a month and helped the company move away from the traditional payment. But WWE failed to grow subscribers, reaching about one million in the United States. In addition, the company gave up another failed football start with XFL.

The WWE Network dismantled its US operations to begin 2021 and signed with Peacock. The movement offers Peacock subscribers live WWE events and a classic wrestling library.

“It’s a big win for WWE,” said media rights expert Dan Cohen. “The price point is going down, so hopefully subscribers and eyeballs are going up. They’re out of technology and they don’t have to maintain and update technology that changes every minute.”

Salen, the former Etsy CEO, was one of two new hires in 2020. He helped Etsy go public in 2015 and is now partly responsible for WWE’s financial future, including more merchandising, e-commerce. and corporate sponsorships, which will feature new campaigns with long-term partner, Procter & Gamble.

In its report for the fourth quarter of 2020, WWE stated that it had a success of 84 million dollars and generated revenues of 238.2 million dollars. But while WWE hosted most of the events without a fan attendance last year, it still earned $ 970 million due to Fox Corp. rights fees. and NBCUniversal.

WWE currently has a market capitalization of approximately $ 4 billion and trades at approximately $ 55 per share. Salen said the WWE network has not lost money, but again, its C-Suite consensus focused on raising licensing fees around its content and ceasing to operate like Netflix.

“Just like we were the first in pay-per-view, first live to the consumer, and now we are the first to return to aggregators,” Salen said. “We felt it was the right time. And in the next few years, we are quite confident that we will be right.”

Salen said a survey he often receives from Wall Street: why should investors be interested in WWE shares?

“Investors know that I choose to spend my time in places where I ultimately believe that value needs to be created,” she said. “I think there is this tremendous opportunity in the next few years to create more value for shareholders.”

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

25,000 fans showed up and McMahon said the event would mimic many of the NFL’s Covid-19 protocols – sitting pods, handing out masks, hand sanitizer. “Only the configuration is different, because we can have people down on the floor,” she added.

However, WWE needs to return to the arenas, and maybe more than professional leagues. The company generates a significant part of its revenues in connection with live ticket sales and travels more often throughout the year.

“As soon as the arenas are open for business, we can start spinning this,” Salen said. “But there has to be a critical mass of arenas that are open for business for us to do that. And we just don’t see that right now.”

WWE also needs to monitor another company that wants to fuel its market share. WarnerMedia’s Turner Sports has reinvested in All Elite Wrestling (AEW) fights. The network last hosted a major wrestling company in 2001, when it owned World Championship Wrestling (WCW), which WWE acquired.

AEW is led by Tony Khan, the son of Shahid Khan, owner of the National Football League team, and has financial support. And so far he is winning praise for his production.

“The theater is good,” Cohen said. “The quality is good. If AEW is missing, however, it is in the power of the stars.”

Internet discussions suggest that WWE will spend money to prevent AEW from fulfilling this mission. Asked about this, Salen said the rumors were not correct. She added that AEW is more competitive for its NXT ownership. This division is like the NBA Fighter League.

“We’ve always had competition, it’s part of the game,” Salen said. “Internally, we pay much more attention to Game 7 of the World Series and if Raw opposes it.”

But while WWE could once again hinder a significant challenger, it can’t stop the future. And among the major questions he faces: How long will Vince McMahon continue as CEO? And who will replace him?

Her daughter suggested that it would be a collaboration of “institutional knowledge”, making decisions when her father decides to leave.

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

Asked to describe WWE’s long-term future, McMahon used the company’s slogan. “It all boils down to WWE,” she said. “I mean, then, now and forever.”

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