Implications of Wrestlemania, WWE’s Cinematic Style

Related to Wrestlemania, there’s some Google web search data available, but because the public data is standardized and longer-term trends are cut up into weeks, I think it’s best to wait a week or two to try to make year-over-year comparisons on the data that includes anything from Sunday.

I’ve been looking at some Google web search data from previous years, though, comparing search data for WWE in the week before Wrestlemania, which we can use to make a prediction about what the search data for the week of Wrestlemania will be like.

Index of Google web searches, the week before and the week of Wrestlemania

Why is this meaningful? I’ve found that Google web search data related to WWE from 2006 to 2013 could, with some adjustments, be used to create a model that predicts pay-per-view buys, so there seems to be an economic relevance.

This year may be trickier since Wrestlemania took place over two days, which might skew search volume higher.

I’m curious to see if WWE discloses, in its next earnings report, a “day after Mania” number for Network subscribers, which they have in the past, or whether they report only quarterly information. WWE may report this as early as next month when it publishes its Q1 2020 earnings.

WWE Key Performance Indicators

Even if there had been no COVID19 crisis, I’d have expected the Wrestlemania subscribers to fall at a single-digit percent year-over-year again.

I still expect the number to be down somewhat from the year before. I don’t have a great sense about the degree to which COVID19 will affect Network subscribers for WrestleMania and Q2. I think there are a number of factors:

  • Positive: A lack of competition from other sports can only make way for interest in WWE.
  • Positive: WWE tried to compensate for lack of live audience by making Wrestlemania a two-day event.
  • Positive: Buzz from night 1 and the unusual presentation of the Undertaker-AJ Styles match may have encouraged interest, although for what it’s worth Google searching was down on the second night.
  • Negative: No live audience makes the show less appealing
  • Negative: Raw and Smackdown episodes building up Wrestlemania declined in viewership as the event neared, possibly as TV audiences grew tired of the empty building matches.
  • Negative: Increased interest in news programming.
  • Negative: Economic stress on consumers due to COVID19 may lead some subscribers to cancel.
Google Trends: Searches related to WWE and WrestleMania were higher for night 1 (Saturday) than night 2 (Sunday).

They advertised their next pay-per-view event, “Money in the Bank” for May 10, so WWE seem intent on continuing on with PPVs. I think it will be difficult to maintain normal interest in PPVs with no live audiences. 

I think there’s questions around government pressure about how long they’ll be able to continue with match tapings, assuming the number of COVID cases rises, as Dr. Anthony Fauci and the Surgeon General suggest. They taped Wrestlemania and tonight’s Raw in Orlando, FL, but finished just before Gov. Ron DeSantis’s stay-home order went into effect. Reportedly, WWE is working on doing future tapings in a secret location.

Streaming, PPV rights, library value

WWE worked with Fox and FITE to offer Wrestlemania on streaming platforms as a standalone PPV, at a $60 price point. Not sure what the strategy is there. Wrestlemania could still be viewed as normal with a $9.99/month Network subscription, and there was no stopping any customer from signing up and canceling right after the event. The event was also available for $60 on PPV via cable and satellite providers, which is normal for all PPVs since the launch of the Network in 2014. According to Dave Meltzer, Vince McMahon felt that it was best to make Wrestlemania available on as many platforms as possible.

WWE also made agreements recently with ESPN and Fox Sports to air library content on each of their linear cable channels. Sunday night airings of past years’ WrestleManias on ESPN in recent weeks drew 720,000, then 839,000 viewers, with P18-49 ratings of 0.25 and 0.31, respectively.

In this environment with no live sports, I think WWE library content has increased valued. Replays of old wrestling events have greater value than replays of old sports games; people will re-watch wrestling events somewhat like they will re-watch an old movie.

From the latest Wrestlenomics Radio: Wrestling is a hybrid of live sports and scripted entertainment in ways that are economically relevant

WWE may be able to extend these agreements the longer that sports cannot run games. I expect the fees related to these agreements are small relative to Raw and Smackdown fees, probably similar to payments a cable channel makes for re-airing a several-years-old movie.

A deal with ESPN+ or Peacock to sell PPV rights away from the Network seems unlikely in 2020. I would expect this to be explored again in 2021, possible before that year’s Wrestlemania. The interaction with Fox makes me think they may be a suitor in future discussions also; even though Fox doesn’t have an SVOD sports service like ESPN+ yet, they’ve shown they’re willing to sell WWE’s PPV over their streaming platforms.

Overall financial outlook

Last week I modeled out WWE’s revenue and operating income for 2020 in scenarios with and without the COVID19 crisis.

I believe WWE TV rights for Raw and Smackdown are not at risk. They will continue delivering some form of content in their time-slots and they will continue receiving the expected payments. WWE has thousands of hours of library content that has never aired in those slots, and they have studio facilities that would allow them to create wrap-arounds for old matches, interview segments or documentary-style productions. They seem intent on continuing on with producing new in-ring content as long as possible anyway.

Because TV rights fees are so big and because it will be cheaper to produce television since they won’t need to broadcast live from sports venues, and because non-televised events are a money loser, I don’t expect WWE operating income for 2020 to be hurt much compared to a non-COVID 2020, even if WWE cannot run traditional live events for the remainder of the year.

A big question will be whether WWE is able to run a second Saudi Arabia event later in the year; each KSA event provides ~$50 million revenue, probably with a high profit margin.

Wrestlemania reception

While all other matches were played in front of no live audience, WWE produced two matches, one on each night, that were basically 20-minute mini-movies. They ambitiously challenged the audience’s common conception of what wrestling is. While divisive for some, the AJ Styles-Undertaker and John Cena-Bray Wyatt presentations were largely well-received.

I expect Vince McMahon will celebrate the productions as a success on the next earnings call. WWE should be applauded for being inventive while being challenged to run Wrestlemania without live fans.

This “cinema” interpretation of wrestling was done earlier outside of WWE by productions like Lucha Underground and by Matt Hardy’s “Final Deletion” within Impact Wrestling. (Arguably there are less acclaimed debts going back further.)

WWE made subsequent attempts at cinematic skits, but Wrestlemania provided the highest-profile examples yet. I expect we’ll see further attempts in this style in and outside of WWE for years to come, probably with varying success. I expect the company will try to replicate its success here, often with diminishing returns. In a sense, the “cinematic” presentation is the next step of Vince McMahon’s ambition to transcend pro-wrestling and “make movies”, as he once said in a 1999 documentary.

An economic point here, though: The further use of this style may allow WWE to prolong the careers of aging talent like the Undertaker (age 55), who has struggled to perform in live in-ring matches for several years.

On the risk side, I fear such productions will enable WWE’s already present over-reliance on older “legend” talent, at the expense of developing the star power of younger wrestlers who must carry business at events and programming year-round.

To be fair, Drew McIntyre and Braun Strowman — both under age 40 — were put over strongly as new champions, with wins over Brock Lesnar and Goldberg. The benefit of their victories however was naturally muted by the fact they took place without the energy of a roaring crowd.

I believe the ongoing decline in many of WWE’s key metrics is largely due to the company’s inability to develop new stars, coinciding with the withdrawal of John Cena as a full-time wrestler. The history of the company’s business (and that of the wrestling industry overall) demonstrates that WWE’s full financial potential can be realized only through the development of new stars.