World Wrestling Entertainment’s big bet on a streaming online video network is bleeding money, and now the company is scrambling to salvage it with major cost-cutting measures and a new pricing model.
The company announced in its second-quarter earnings release Thursday that the WWE Network had just 700,000 subscribers, well short of the 1 million subscribers the company has said it needs for the network to break even and even further from the 1.4 million users needed to replace the pay-per-view business the network is expected to supplant.
Though the company said in April that it was “well on its way” to hitting 1 million subscribers by the end of the year, the network has added just 33,000 new subscribers since then despite offering a free trial and launching an all-out marketing blitz.
Perhaps as a result, the company said Thursday that its projected 2015 operating profit improved by $US30 million, primarily because of cost-cutting measures and a new plan to reduce total company staff by 7%.
The company now estimates that at its current subscription rate it would lose about $US20 million in 2014, largely because of network startup costs.
The WWE will also offer a new pricing model for the Network, which has required a six-month commitment from customers in exchange for access to its monthly special events (previously available on pay-per-view for upward of $US50) and other content at a price of $US9.99 a month.
In August, when initial subscribers will first have the option to unsubscribe, it will debut an additional $US19.99 option for customers who would prefer not to do the six-month commitment.
The company also announced plans to expand the network, currently available only in the U.S., to more than 170 countries and territories starting Aug. 12.
Still, the company has estimated that international demand for the network is only a fraction of the domestic audience. And even then, as wrestling business reporter Chris Harrington has pointed out, there’s reason to believe many fans overseas have already found extralegal ways to buy the network.
On the bright side, the company announced it lost $US0.18 per share in the second quarter, a better performance than the $US0.22 loss analysts had been expecting. Revenues for the quarter came in at $US156.3 million, beating analyst expectations of $US155.5 million.
The stock is at $US13.17, up $US1.08 from its $US12.09 close the previous evening. Still, that’s down considerably from the $US19.93 price it was trading at prior to a May crash on news of a disappointing new television contract.