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Best For Business (5/4/2015): Three Things We Learned From the State of WWE's Financials

Hello everyone, and welcome to the first edition of Best for Business, our regular feature on the financials and metrics behind the wrestling industry. I'm Mark De Joya (@MDJSuperstar), the resident numbers guy here at Smark Henry, and I'm here to help you all as wrestling fans to make sense of the money matters for our sport.

The WWE released its first quarter financial report last April 30th, and combined with a presentation they shared late last year on their market profiling, it seems safe to draw some conclusions on how they're probably going to act in both the short and medium-term future.

Let's get to it.


Big Headline #1:
Forget all the cries of "Vince hates money," the WWE just turned in the highest-grossing quarter in their history.

We already knew that 2015 would be a year of big ambitions for the WWE. In their year-end 2014 presentation, they pretty much said, "Yeah, we're done making excuses for a less-than-spectacular 2008-2014. From this point forward, we're gonna blow you away, just like Roman Reigns did at the 2015 Royal Rumble!"

It's one thing to make big promises, it's an entirely different one to actually follow through.

And follow through they did, in a HUGE way. The first quarter of 2015 just set an all-time high for gross revenue delivery for the WWE, just north of $176 million.

To be clear, that's a HUGE number, representing a swing of over $50 million from Q1 the previous year. Although we do need to be aware of one thing: that's mainly because WrestleMania in 2014 fell on April 6th, versus WrestleMania this year happening on March 29th, meaning we're in for a bit of a letdown when the WWE reports their Q2 2015 performance, which will most likely reflect a downturn from last year's Q2 revenue delivery.

But it's good to hear numbers like this; it's an encouraging headline for investors to hear, and it's nice knowing that the WWE actually turned in a massive 40% revenue growth even with the IWC complaining over Roman Reigns' much-maligned Royal Rumble win, the lack of Daniel Bryan in the WrestleMania run-up, and the sporadic appearances of both Brock Lesnar and the Undertaker.

We're probably not incredibly happy that the WWE only delivered net profitability of just 5.5% on net income of $9.8 million, but considering that U.S. GDP only grew by 0.2% in Q1 2015, then Vince McMahon certainly has a lot to be pleased with.


Big Headline #2:
Stick a fork in Pay-Per-Views; live TV and the WWE Network are king.

What's even more interesting is the breakdown of what factors contributed to the WWE's spectacular Q1 2015 performance.

Let's take a look at the revenue drivers.

Let's focus on the orange data first.

We know that Vince McMahon's early efforts in the 1980s were a key contributor to launching the pay-per-view model as a viable platform for live sporting entertainment. 30 years later, he's doing the same trick all over again with the streaming WWE Network. Pay-per-view revenues are down to a measly 5% to total Q1 revenue, as compared to the Network quadrupling in contribution from just 4% last year to 16% in 2015. Behind improved TV rights monetization and live events, that means the WWE Network is now the third most important creator of value for the WWE as a whole.

Think about that. It's a platform that's barely been around a year, and is now one of the three biggest moneymakers for the crew at Stamford, Connecticut.

Subscriber count has nearly doubled in a year to over 1.3 million, and it's up in the air how much higher this can go.

And boy oh boy, do people love their WWE Network. According to the Nielsen data shared in their investor call, the average household spent over 50 hours actually watching content, next only to Netflix, and well ahead of standard heavyweights like HBO and Cinemax.

There have been obvious trade-offs, as we see when we look at the blue data. Digital media and the DVD business have tremendously contracted from contributing a combined 13% to total revenues in Q1 2014 to just barely 5% today. It was an expected compromise however, and I don't think the company minds.

Meanwhile, live events grew in contribution from 17% to 22%, thanks to WrestleMania falling in the covered period. We'll need to see if this holds up over the rest of the year. But the company claims that even not counting 'Mania, live event performance has been up overall.

Vince McMahon has balls, we know that much. He bets big, and even though some bets like WWE Studios, the XFL, and the World Bodybuilding Federation may have run foul, the WWE Network is a game-changer in how the company will be making money and distributing content to a global audience.


Big Headline #3:
Sorry, smarks, but the audience that WWE will be writing for are casual 50-year-old male fans.

For all the rage we see online over how so many storylines seem so rushed or written for the lowest common denominator, it seems that the WWE doesn't have a choice based on how their current audience is structured.

Today, almost two out of five fans are 50-years-old or older, with almost two-thirds being male.

And for all the clamor for more intricate, drawn-out, prolonged storytelling, the fact of the matter is that in the US, which contributes the bulk of WWE business, four-fifths of the audience are either casual or lapsed fans, meaning that the highly-involved, intelligent serial storytelling we see in epics like "Breaking Bad" or "Game of Thrones" will probably fly over the heads of most of the viewers, who just aren't as involved or committed to the content as the traditional "smart" fans are.

Unlike a typical "Sopranos" fan drooling over every detail and nuance in each episode, they may miss episodes here and there, and won't be as anal about catching up with developments on the WWE's other platforms on what they missed.

Will we see more smarky "breaking the fourth wall" moments like CM Punk's infamous "pipebomb" segment, or the three-year-long chase reconciliation between "Macho Man" Randy Savage and Miss Elizabeth?

I doubt it.

Content will have to be bite-sized, snackable, and punchy; more of quick appetizers than a 16-ounce steak. 

It's unfortunate that the numbers play out this way, but it tells us one thing: the WWE isn't deliberately insulting their intelligence. They know to a granular level what the general fan-base looks like, and tailors their content as such.


Taken piecemeal, it sounds like I'm applauding the WWE for winning with exactly the formula that we, as intelligent Filipino wrestling fans, hate with a passion; the company just delivered record-setting revenues with content written for people who don't love wrestling as much as we do, without having to expand WWE Network coverage to our little corner of the WWE Universe.

But I think there's plenty of reason for optimism.

2015 is a turnaround year for ambitions and growth, that much is clear. The WWE has proven that the Network can be a viable value driver, and from a "test market" mode of thinking can now progress to full-on roll-out. It's currently one of their three big financial pillars - what's to stop them from turning it into the outright biggest one?

The Pareto principle (alternatively known as the 80-20 Rule) suggests that the company will derive 80% of its value from just 20% of its audience. It's our job to demand more from the company, and prove that we can be an important contributor to its growth ambitions.

We can do small but important things. Share content from the WWE YouTube channel. Buy a couple of t-shirts from WWE Shop. Follow the live hashtags for every show, join in the conversation, tweet about the storylines and superstars that we believe truly matter. It worked for #GiveDivasAChance, why not make it work for everything else?

The Filipino wrestling fan is not a sheep. 

But are we working enough to shape the numbers in our favor? Let us know in the comment section how else you think we can make investing in the Philippines a #BestForBusiness proposition for the economic engine of Mr. Vincent Kennedy McMahon.


Mark De Joya (@MDJSuperstar) is an advertising professional and brand strategist by day, but dreams of being the Vince McMahon of the Philippines by night. He writes anything to do with numbers for Smark Henry: People Power, our weekly fan survey, and Best For Business, our regular financial report. With 18" arms and a 300-pound squat, he is also the official bouncer of the Smark Henry offices.


  1. Good thing you mentioned. Will make my best to buy merchs. For now, social media it is as always

    1. Social media matters too! With their renewed focus on digital, the volume of tweets and mentions matters just as much as TV ratings.

      I know buying official merch is a heavy burden - I only have two myself, a CM Punk shirt and a Triple H one, since they're so damn expensive. But if we want the WWE to pay attention to us, we need to prove that we're worth investing effort in to begin with.


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