WWE shifts to Netflix strategy on new subs with free month, no commitment

With the launch of an OTT streaming platform still impacting its bottom line, WWE changed tactics on its SVOD strategy, dropping its six-month commitment and looking to entice new subscribers with a Netflix-style offer of one month of free access to WWE Network.

The new pricing scheme is active beginning Nov. 1.

Chairman and CEO Vince McMahon noted that "it's time to remove all the barriers to those that want WWE."

WWE Network added just 31,000 subscribers in the third quarter, a 4 percent increase sequentially. It has a total of 731,000 subscribers worldwide--703,000 in the United States. While subscriptions to the over-the-top service peaked through Sept. 30 at 971,000, approximately 255,000 subscribers dropped the service once their six-month commitment ended, The Wall Street Journal noted.

In August, WWE had introduced a $12.99 "cancel any time" plan to attract new subscribers to the OTT service. About 23,000 customers signed up in the third quarter. That pricing plan is now gone, replaced by a simplified, no-commitment $9.99 monthly subscription, WWE said in its earnings release.

The change to a pay-as-you-go service could be a risky one, the WSJ's Joe Flint said. "While it may entice more people to sign up, it will also make it easier for people to cancel," he wrote.

WWE Network's subscribers are a loyal bunch, though. According to the company, 90 percent of its subscribers access the OTT service at least once a week, and 99 percent access it at least once a month.

However, WWE Network needs at least 1 million subscribers to be profitable, a number it likely hoped to reach before the end of this year thanks to an early rush of subscriptions when the online service launched in April. But with those numbers falling off, and rumblings from traditional MVPDs about the OTT service competing with their WWE broadcasts, reaching that milestone could be dicey. Already, DirecTV and Dish Network refused to carry any of its pay-per-view events since the service launched, contributing to a 56 percent year-over-year falloff in revenue from PPV to just $3.7 million in the third quarter.

However, its television revenues overall remained strong, growing 68 percent to $26.1 million. And WWE still has long-term agreements with NBCUniversal's cable networks that should keep those revenues flowing in until at least 2018.

For the third quarter, WWE reported a net loss of $5.9 million (8 cents per share). The company brought in $120.2 million in revenue, a 6 percent rise from the year-ago period.

For more:
- see this release
- WWE's earnings report
- The Wall Street Journal has this story

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