Post a Comment On: Indeed Wrestling

Let's start with what we know:

WWE Network
03/31/14: 495,000 subscribers (10-Q; filed 5/2/14)
04/07/14: 667,287 subscribers (Press Release 4/7/14)
06/30/14: 699,750 subscribers (10-Q; filed 8/1/14)

There's some additional data-points hidden in the 10-Q releases.

3/31/14
Q1 Network Segment Net Revenue: +$18,432,000
Q1 Network Segment OIBDA:-$3,589,000
Q1 PPV Buys: 677,400
Q1 Revenue/Buys: $20.00
Q1 PPV Revenue Calculated: $20.00 x 677,400 = $13,548,000
Q1 WWE Network Revenue: $18,432,000 - $13,548,000 = $4,884,000
Q1 Paid Subscription Days: 29 days (2/24/14 to 3/31/14 with a one-week free trial)
Q1 Estimated Subscriptions at Midpoint: $4,884,000 / $9.99 = 488,889 subscriptions on 3/16/14

6/30/14
Q2 Network Segment Net Revenue: $43,235,000
Q2 Network Segment OIBDA:-$7,347,000
Q2 PPV Buys: 1,058,600
Q2 Revenue/Buys: $22.51
Q2 PPV Revenue Calculated: $22.51 x 1,058,600 = $23,829,000
Q2 WWE Network Revenue: $43,235,000 - $23,829,000 = $19,406,000
Q2 Paid Subscription Days: 91 days (4/1/14 to 6/30/14)
Q2 Estimated Subscriptions at Midpoint: $19,406,000 / $9.99 = 647,511 subscriptions on 5/15/14

Since Q2 number, there's been two big developments:
I) First round of six-month subscriptions coming up for renewal
II) Global Launch of the WWE Network

Let's combine known/derived information.

A. 02/23/2014: no subscribers
B. 03/16/2014: 488,889 subscribers
C. 03/31/2014: 495,000 subscribers
D. 04/07/2014: 667,287 subscribers
E. 05/15/2014: 647,511 subscribers
F. 06/30/2014: 699,750 subscribers

A to B: growth at 23,280/day
B to C: growth at 407/day
C to D: growth at 24,612/day
D to E: decline at 520/day
E to F: growth at 1,136/day

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There's several pieces to the current WWE Network subscription number:
a) Subscribers to the domestic WWE Network who have renewed
b) Subscribers to the domestic WWE Network who are still in their initial six-month subscription
c) Subscribers to the global OTT WWE Network
d) Subscribers to the Rogers/Canadian "WWE Network"

We know that at least 495,000 subscribers will have their subscription come up for renewal before Q3. In reality, it's logical to conclude that the entire WrestleMania crowd (667,287) ought to be up for renewal (though I suspect some of these people were involved in the 128,000 cancellations from Q2).

Let's assume that WWE Network retention could range from low (I'll say 70%) to high (I'll say 90%).
With the "WM base" that would range from 467,000 (70%) to 534,000 (80%) to 601,000 (90%).
Let's take the midpoint (534,000).

Subscribers to the domestic WWE Network who have joined after WrestleMania and are still in their initial six-month period would probably be around 137,000. Let's assume they are still active.

Then you have the international roll-out on August 12.
There's essentially two pieces: the international OTT service and the Canadian Rogers service.

If we look at the original Q1 growth for the domestic service (13,750/day), the international roll-out could range from 5% to 40% as robust. After 50 days, international subscriptions could range from 34,375 (5% of domestic ramp-up) to 68,750 (10%) to 171,875 (25%) to 206,250 (30%) to 275,000 (35%).

I'm going to go with about 15% which would suggest about 103,125 international WWE Network OTT subscriptions.

The Canadian/Rogers' number is even harder to guess. It could be tiny or relatively large. For now, I'll go with 50,000.

Subscriptions = non-renewal base + renewed base + int'l OTT + Rogers
Subscriptions = 137,000 + 534,000 + 103,125 + 50,000 = 824,125.

Q3 prediction of 800,000 to 825,000 seems to be a popular bet.

Analysis: Chris Harrington (@mookieghana) / chris.harrington@gmail.com