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WWE's Michael Weiss welcomed everyone to the call and noted it would be lead by George Barrios and Vince McMahon.
Vince McMahon said they had strong earnings growth this quarter. He said the big international growth is coming from television rights and from the WWE Network. The WWE Network is outdoing their former WWE PPV revenue.
Vince noted they added 85 hours of original content for the Network. He ran down some of the programming and noted the NXT shows do very well, mentioning the Japan show but not, for some reason, the one from Brooklyn. He mentioned Breaking Ground just debuted and there would be a Takeover: London event as well as episodes of 24.
The global reach of the Network will "take a pretty good leap" with the addition of the Indian sub-continent, Germany and Japan in November and January, respectively.
Vince then talked about the three sellouts in Brooklyn, NY, noting that NXT, which he said was a developmental brand but is not a full-fledged brand thanks to his son-in-law, Paul Levesque.
They have 37 new advertisers after the USA Network upfronts. He pushed how huge their Youtube channel is.
George Barrios reviewed the numbers from the release.
They are working in 90 hours of new, original content for the WWE Network for the next quarter. They are also going to be doing more exclusive short-form videos on Facebook, Youtube, etc.
They would not give guidance on how they expected the WWE Network to grow but they noted that other streaming services at the same level and age, grew at 22%. They feel the WWE Network has a big growth potential as the entertainment landscape continues to change.
They opened the line for Q&As.
They were asked why they gave such a strong suggestion for Network growth given that they are advising their fourth quarter could be flat in comparison with the year before. Barrios noted that the Network's growth, year to year, is more important than sequential numbers. He said that Summerslam did so well for them as almost a "mini-Wrestlemania" creatively and on a business level that they expect this quarter did so well, the next quarter may not hit as high.
They were asked about plans to invest in 2016 and would that happen if the Network growth drops. They are trying to balance how much of their earnings will trickle down to investments into technology and new markets. They won't know numbers until the new year. They were asked if the investments were necessary. Barrios said they believe acquiring new material is a long-term investment as they see them as assets for VOD and they will be valuable for 2016 and beyond.
They were asked about the credit card chip card issues Netflix has had and if it had an impact on the Network. They have not seen anything that makes them believe that it has.
They were asked about the churn of the Network subscriber base. Barrios said they have hoped to change the behavior of buyers who wouldn't buy the PPVs at the old price and that those who would want certain PPVs would change from coming in and out to remaining.
They were asked about potential new price tiers. They feel the $9.99 price is easy to explain and market. They could one day have multiple tiers and versions but right now they are happy with the current model.
They were asked if they should continue to invest in original content given the numbers state that the subscribers are watching the PPVs and the older content more. Vince said you need to be able to drive the viewers via the current and major live events. Once you are subscribing, you sample and use the VOD material. They need to have multiple reasons for fans to want to subscribe and watch the Network, not just one. Barrios shot down a statement they had spent $20 million on just new programming.
They were asked about YouTube making their material available on the Red subscription page and whether it hurts the company's own subscription model. They view Youtube as a big asset globally. They used TV and cable distribution to grow their brand and that's how they view social media and Youtube - they are places where people go to consume content. There is a balancing act of what content goes where. They pioneered PPV and they are doing that today with created short form content, Raw and Smackdown on paid TV, and with the WWE Network subscription model.
On Network ad revenue, they are running it and it has a "light touch." They are experimenting and they believe the brands that are working with them have found it intriguing.
They were asked about the Raw and Smackdown ratings being down, what was causing it and what they were doing to battle that. Barrios said that they don't think about one metric, not just one aspect. When they put everything all together, they are gauging the audience globally more than ever before. It's hard to tell if it's cyclical or secular. They don't like being down and they are working hard to battle that but they are doing better than anyone else on the pay TV scale. Their ratings are higher than USA or Syfy across the board.
They turned down the chance to give individual guidance for the WWE Network schedule. 19-20% of subscribers have been international.
On the subscriber churn and trying to prevent it, Barrios said they need time to change the behavior of the audience. They had a behavior that was 30 years old and they have to change that. It's only been 18 months. They want to keep making the service better and adding to the VOD library. They want to improve the content and the experience.
They were asked if they could share anything on plans to invest in 2016. It will probably be over time in different segments on content for the Network. The reason they are investing in emerging markets is that they have a great fan base in India and they believe there is a long "tail-wind" there. They are going to invest in China in 2016. They want to know what consumers are doing across the board and they are investing more into the technology side.
They were asked about the Tapout brand plans for 2016. They said they were very excited about the brand but were not going to tip their hand yet.
They are very excited about their current Germany TV home, as they were previously on a smaller pay-tv home. German audiences don't traditionally pay for TV content and they are something of an anomaly compared to other countries, such as the UK, which will. They are excited to see what the new partnership will lead for the Network and other elements of the company. They have been in China since 2007 and there have been more changes there over the last 12 months than there have been in 20 years thanks to the digital player. They have an office there and are going to increase staff and other opportunities there.
NXT was brought up as they were asked why it's become so popular and whether there is a balance to prevent it from becoming too popular. Barrios said NXT is a great example of all the new platforms fans use to consume talent and they believe social media has a lot to do with it. They are on a Network that has 1.3 million subscribers and can sell out an Arena the size of the Barclays Center. Barrios said they don't worry about it competing with Raw and Smackdown and if you go to an NXT show, it has a different feel and audience.
That was it for the call!
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