Last week, the WWE and Spotify announced a deal where Spotify’s The Ringer will team up with the WWE to launch “an exclusive audio network.” The WWE and SPOT are two of my favorite companies, and I thought that tie up really illustrated lots of the reasons I like both, so I wanted to put some pen to paper on it.
Nice post and arguments for WWE valuation. One question that comes to mind across the "value per eyeball" comparisons is what are the nature of those eyeballs. I'm not a marketing expert, but it seems that monetizing viewers would be based to some extent on the demographics of the viewer. Not just how engaged they are, but how much spending power they have. Streaming is probably less sensitive, but how much does the average WWE fan spend compared to NBA, NFL, MLB, etc.? What is the age bracket? Is it like video games where it was formerly 30-under males but is expanding (are fans sticky)? This is not attacking the thesis as it could easily still indicate WWE rights offerings go up noticeably (especially given the nature of offerings going to the highest bidder), just raising the question. Again, great work!
Can't claim to be a marketing expert, but in a streaming world the value of a sub weigh outweighs the value of advertisers (actually, similar to how cable channels monetize).
On demos, I don't think WWE is terribly disadvantaged versus others.
I remember back in 2013 or so contrasting what Comcast was doing with NBCSN's rights strategy vs. FS1's strategy. Comcast was targeting rights where they could get meaningful exclusivity, regardless of rights: being the only national NHL broadcaster, being the only Premier League broadcaster, being the only F1 broadcaster. That's the strategy that maximizes the ability to turn a passionate fanbase into direct or indirect subscription revenue, and it's not surprising that a party to carriage fee negotiations and selling subscriptions would take that view. FS1 pursued viewership: partial (very often second-tier) rights to cable baseball and major college conferences (the modern Big East being perhaps the only notable exception). FS1 can sell lots of ads with that, but if you're an Oklahoma fan and FS1 has one football game a season, your TV bundle not having FS1 isn't going to cause you to change bundles: you can go to a friend's house or a bar for the game.
I think that thinking is what led Comcast to bid as low as they did for the NHL once Disney got the first package (I've already hypothesized that Turner going all out for it was likely a precondition for the Warner/Discovery merger). One could of course point to FS1 continuing while NBCSN gets shuttered, but I read the NBCSN shutdown as being more about turning USA (which I believe gets more revenue from the bundle than NBCSN) into the live sports that were on NBCSN (plus WWE) with the schedule filled out by previewing Peacock content vs. the bottom-of-the-barrel filler that NBCSN had. If Fox hadn't sold off FX, they might well be doing something similar.
So for the WWE, I think Comcast would be more than happy to get full control of the rights, whether that means bidding enough conditional on getting all the rights to dramatically increase what the WWE is getting or doing a buyout.
Nice post and arguments for WWE valuation. One question that comes to mind across the "value per eyeball" comparisons is what are the nature of those eyeballs. I'm not a marketing expert, but it seems that monetizing viewers would be based to some extent on the demographics of the viewer. Not just how engaged they are, but how much spending power they have. Streaming is probably less sensitive, but how much does the average WWE fan spend compared to NBA, NFL, MLB, etc.? What is the age bracket? Is it like video games where it was formerly 30-under males but is expanding (are fans sticky)? This is not attacking the thesis as it could easily still indicate WWE rights offerings go up noticeably (especially given the nature of offerings going to the highest bidder), just raising the question. Again, great work!
Hey Kevin,
Can't claim to be a marketing expert, but in a streaming world the value of a sub weigh outweighs the value of advertisers (actually, similar to how cable channels monetize).
On demos, I don't think WWE is terribly disadvantaged versus others.
If you do another post on WWE. I would more then be happy to read it! Great stuff, thank you!
I remember back in 2013 or so contrasting what Comcast was doing with NBCSN's rights strategy vs. FS1's strategy. Comcast was targeting rights where they could get meaningful exclusivity, regardless of rights: being the only national NHL broadcaster, being the only Premier League broadcaster, being the only F1 broadcaster. That's the strategy that maximizes the ability to turn a passionate fanbase into direct or indirect subscription revenue, and it's not surprising that a party to carriage fee negotiations and selling subscriptions would take that view. FS1 pursued viewership: partial (very often second-tier) rights to cable baseball and major college conferences (the modern Big East being perhaps the only notable exception). FS1 can sell lots of ads with that, but if you're an Oklahoma fan and FS1 has one football game a season, your TV bundle not having FS1 isn't going to cause you to change bundles: you can go to a friend's house or a bar for the game.
I think that thinking is what led Comcast to bid as low as they did for the NHL once Disney got the first package (I've already hypothesized that Turner going all out for it was likely a precondition for the Warner/Discovery merger). One could of course point to FS1 continuing while NBCSN gets shuttered, but I read the NBCSN shutdown as being more about turning USA (which I believe gets more revenue from the bundle than NBCSN) into the live sports that were on NBCSN (plus WWE) with the schedule filled out by previewing Peacock content vs. the bottom-of-the-barrel filler that NBCSN had. If Fox hadn't sold off FX, they might well be doing something similar.
So for the WWE, I think Comcast would be more than happy to get full control of the rights, whether that means bidding enough conditional on getting all the rights to dramatically increase what the WWE is getting or doing a buyout.
Thank you for the thoughtful comment!