Whatever your feelings are on the past and present WWE product, there is no denying that the company is a revenue generating machine. They have a strong and deserved reputation within the entertainment industry for working multiple long standing revenue streams to increase their bottom line.
They have an advantage over many rival entertainment brands in that they can easily access revenues from a range of areas that other companies might not be able to.
In the main, they have five main revenue streams from which they derive their income. These are:
1) Live event income. The sale of tickets for house shows, TV tapings and Pay Per Views
2) Pay Per View buys. As it says on the tin. A significant but declining percentage of their income is derived from PPVs, in particular, the cash cow that is Wrestlemania.
3) Television Rights Fees. Networks like USA and SyFy, as well as dozens more across the globe pay WWE a handsome fee annually for the rights to air WWE programming on their channel.
4) Licensing Revenues. This covers the money paid to WWE for the rights to manufacture and distribute merchandise featuring the WWE logo and wrestler images. This can be anything from t-shirts to video games to pillowcases to Christmas ornaments. There really is very little that you can’t buy with John Cena’s shit-eating grin on.
5) Home Entertainment. This covers their DVD and Blu Ray releases.
Clearly there are more revenue streams than this but they are relatively minor in comparison. WWE Studios is one potential stream that as of now, makes a loss. Another is advertising revenues from WWE.com which you imagine are significant with them with the audience they attract to their constantly revamped site.
Each of these segments is under pressure and either stagnating or shrinking meaning their profit margins and consequently their share price is declining too. Is it all WWE’s fault? No. We are in a horrendous period of global financial upheaval and many companies across the globe are suffering from large drops in revenue or simply going out of business altogether. WWE are clearly doing what they can to prop up these revenues using a variety of tactics such as increasing their international tours and beefing up their home entertainment release schedule to maximise the use of their excellent back library of wrestling programming.
In a crisis like we are in now, companies have to do everything in their power to squeeze every Dollar, Pound or Euro out their current customers and work hard to find new customers. The latter is something WWE are also doing an admirable job at by aiming their programming at younger audiences, thus increasing sales of merchandise like action figures to those children now while hoping they will become the next wave of PPV and ticket buyers in the future. At the same time, they are offering interesting DVD projects on a variety of subjects that tend to be of interest to an older, more hardcore fan base.
What WWE haven’t really done in the last few years is strive to create any brand new revenue streams. The last one really was WWE Studios and that is yet to bear fruit.
Instead they have seemingly chosen to concentrate on jacking up their revenues in the areas they know and have expertise in with limited success. It feels like they’re putting their finger in the dam in a lot of ways. Putting in a hell of a lot of hard work and investment just to stand still.
But what if they started to explore some brand new profit streams? As well as trying to reinvent the revenue formulas they have been comfortable with for decades, what if they supplemented this with some new ideas to start from the ground up?
One way they are doing this is the WWE Network due to launch in April 2012. No, that’s not right. In late 2012. Really? Pull the other one. If this new network was coming this year plans would firmly be in place by now. Personally I think this never sees the light of day as a traditional cable channel. Secondly I believe it will be a money losing, catastrophic failure to make the XFL loss look like chump change. In a few weeks I plan to write a column to elaborate on this but for now, let’s put it to one side.
What I wanted to do this week is to suggest a few new ideas that have been bubbling around my mind that could make fresh, untapped revenue for WWE. Some of these may have already been discussed, maybe even dismissed. But what could WWE do to find some fertile new revenue streams? Let’s have a look.
Individual wrestler sponsorship.
WWE already derive some revenue from sponsorship clearly. They have PPVs carrying sponsors as well as certain articles on WWE.com and occasionally, replay segments of Raw – like the WWE Slam Of The Week. But they could do so much more.
In soccer, each team has their sponsor. Manchester United has AON. Chelsea are sponsored by Samsung. But on top of this, all of the star players have their own endorsement deals with various companies such as a sports equipment manufacturer like Nike or Adidas who provide the players with their boots and pay them handsomely to wear them, complete with logo of course.
So why not do this in wrestling? Surely certain brands would have an interest in sponsoring individual characters rather than a wrestling show as a whole. What about Under Armour sponsoring John Cena, Hawaiian Tropic sponsoring Zack Ryder or Dolph Ziggler being sponsored by a grooming brand such as Gillette? It would work. And as WWE control all the images of their characters, they could keep all the revenue, unlike in soccer where David Beckham keeps all the money from his individual endorsements.
The brands would get plenty of exposure. They could have their logos on the trunks of the wrestler or on their cryon next to their name during their entrance. Hell, how about having Lillian Garcia say something like ‘Approaching the ring, presented by Guinness, here is, Sheamus!’ As fans, would we have a problem with that?
Private Wrestling Events
Name any big star in the world of music. Beyonce, Lady GaGa, Elton John. All make millions and millions from sell out world tours that are splashed all over the media constantly. What we don’t hear about though is another way they make easy money – private concerts. The world has plenty of insanely rich people. And these rich folk like to throw a party. And what better entertainment than your favourite performer? Want Prince playing at your daughter’s wedding reception? No problem if you have the coin. But why couldn’t some of these millionaires and billionaires be wrestling fans? Or more likely, have kids that are. Who wouldn’t want an invite to a birthday party where you get John Cena vs. CM Punk as the entertainment rather than a guy making bunny rabbits out of balloons?
Sure, this isn’t going to be something that comes into play every week but you only need a couple a year to make a significant impact on the bottom line.
Branded Wrestling Schools
I’ve always been confused that the business of wrestling schools is left to washed up old wrestlers of varying quality. Imagine if WWE opened their own wrestling schools manned by former workers under contract and various trainers. Surely they would attract a large amount of marks and genuine prospects that would happily pay thousands of dollars a year to train at a WWE branded gym overseen by say, Fit Finlay.
At the very least, WWE could reap the financial rewards from a chunk of customers paying their annual membership fees without any chance of actuallymaking it as a wrestler. At best, they are basically operating a wide reaching scouting network that will be sure to gobble up any genuine prospects with the combination of talent and application. This one seems a bit of a no-brainer to me.
What once was old is new again. – ICOPRO Reborn!
Back in the early to mid 90’s WWE had a couple of ideas that were if anything, probably slightly ahead of their time. The first was ICOPRO, Vince McMahon’s attempt to take on the bodybuilding supplement market. We know it failed fairly miserable but was it just before it’s time? Over the last ten years, the public as a whole has become ever more health conscious and protein shakes, creatine etc can now be found for sale in every pharmacy or gym which literally hundreds of brands available online. So why not a WWE version? They have the shop window for it and if it’s a quality product, people will buy. Not just WWE fans. One key change would be to use the WWE brand. Why launch an unknown brand like ICOPRO was back in 1991 when you have a global trademark already associated with fitness and great physiques. Use it. WWE Supplements works for me.
Life on the ocean wave
Who remembers the Wrestle Vessel? Or WCW’s Bruise Cruise? Well WWE.com does as they have a story about them on their website that calls for their return in a rather tongue in cheek way. But in all seriousness I ask, why not? Theme cruises are big business for fans of such diverse properties as Disney movies and the Saw films. WWE made a profit on these cruises at one point and I am confident they would again. Hell, TNA ran their own version in 2011 and it was a qualified success. Imagine replicating that with a roster of current WWE main event talent and a sprinkling of legends. It’s money.
So there you have it. Just a small selection of ideas for WWE to use to add to their shrinking bottom line by thinking outside the box a little. Sure, none of these are going to change the fortunes of the entire company on their own but if they could add £10-15 million to their turnover from using a combination of a few of them then that could be the difference between a growth year and a contracting one.