New Japan Pro-Wrestling’s parent company, Bushiroad, Inc., released its annual report on Monday for its fiscal year ending July 31, 2020.
Revenues for Bushiroad’s sports division, largely supported by New Japan, were down slightly.
FY2018: 4.891 billion yen = $47 million USD
FY2019: 5.333 billion yen = $51 million USD
FY2020: 5.021 billion yen = $48 million USD
Bushiroad sports division revenue trends are shown here in yellow.
Bushiroad’s report stated that NJPW World has 100,000 paid subscribers. This is about the same as the service had one year prior.
Approximate known data points about NJPW World subscribers are shown here.
The report also highlights that New Japan drew 70,071 attendees over two days at the Tokyo Dome for Wrestle Kingdom 14 in January, that New Japan established in November a U.S. incorporation associated with their strategy to do business globally and in the U.S., and that in December Bushiroad acquired women’s wrestling promotion Stardom.
As expected, a study of New Japan’s official website reports of event attendance shows attendance was down in FY2020. Due to the Covid-19 pandemic, events from March 1 until July 11 were cancelled or had no fans in attendance. Events from July 11 and after have only been allowed with limited capacity.
A pro forma comparison of attendance that excludes the months where events were affected by Covid, and therefore looking only at the months of August through February, shows total attendance was on track to exceed prior years, largely related to an increase in the number of events.
From August 2019 to February 2020, New Japan’s total attendance — Wrestle Kingdom excluded — was up 12% over the months of the previous year. New Japan ran 100 events in that period in FY2020 but only 86 in FY2019. Consequently, average attendance from August 2019 to February 2020 is down 3% from the year prior. Illustrated below:
It’s likely we’ll see a specific report from New Japan about it’s own revenue. FY2019 revenue for the company is show on the New Japan official website in its company profile page. In FY2019, New Japan says it generated 5.4 billion yen in revenue, or $52 million USD. That’s New Japan’s highest grossing year in its history.
A balance sheet for the fiscal year may appear on the official website domain sometime in October that shows net income. In FY2019, New Japan reported net income of 493 million yen, or $4.7 million USD. For comparison, WWE in the calendar year of 2019 reported $960 million in revenue and $77 million in net income.
Bushiroad reported a profitable year for FY2020, with the equivalent of $15 million in net income on revenues of $316 million.
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Reporters and pundits are repeatedly struck by what they see as Donald Trump’s new presidential tone, suggesting that — after years of inflammatory speech, gross mismanagement, and an inability or unwillingness to distinguish truth from wishes — he might finally begin behaving like a normal president. He never does.
Reporters and pundits are repeatedly struck, too, by what they see as Vince McMahon’s new approach to WWE creative, suggesting that after years of terrible TV shows, a chronic failure to develop stars, and an inability or unwillingness to distinguish his consumers’ taste from what he wishes it was — he will finally get Raw and Smackdown back on track. He never does.
The cabinet members surrounding the president turnover rapidly. They’re introduced with effusive praise before they’re cast off with insults. The naive among us buy the notion that the aides are indeed the problem.
Despite being the wealthiest nation and the supposed leader of the free world, Donald has set the country on a track through which those notions are not sustainable, if they are even still true.
Despite being the wealthiest wrestling company and the supposed industry leader, Vince has set his company on a track through which those notions are not sustainable, if the latter is even still true.
Donald disdains the media that covers him; he calls them “fake news”. Well before Donald did so, Vince disdained the media that covered him; he calls them “the dirt sheets“.
Speaking of which, Donald thinks he’s brilliant when it comes to branding and redefining language in his favor: “fake news”, “Crooked Hillary”, “Sleepy Joe”, “China Virus”. Vince thinks he’s brilliant in this regard as well. He doesn’t have wrestlers; he has “superstars”. He doesn’t have fans; he has “the WWE Universe”. He’s not in the wrestling business; he promotes “sports entertainment”. These terms are generally adopted only by their most sycophantic supporters.
Donald has affection for the Saudi government. Despite a host of ongoing human rights offenses, they’re an extremely lucrative business partner. Vince has affection for the Saudi government. Despite a host of ongoing human rights offenses, they’re an extremely lucrative business partner.
Vince’s reactions to crises like declining TV ratings show how he lacks the discipline for long-term planning. He’s recklessly optimistic in the face of serious challenges. He’s unable to act on anything but quick fixes or distinguish good advice from that which affirms his ego. Whether it’s Raw Underground or the Thunderdome or bringing back legends from the past. Not to mention, Vince was wary to embrace coronavirus testing; for fear testing may tell him bad news.
Both of their cults of personality are apparently capable of turning people who were once lionized — like Lindsey Graham and Rudy Giuliani … or Seth Rollins and Edge — into shameless disciples of power who’ve internalized a familiar victim complex. Those who escape the cult are either deafening in their silence — or, they write books … or record interviews with Chris Jericho, describing the chaotic and dysfunctional scenes of their former workplace.
Vince will control WWE creative for the remainder of his functioning life. Donald jokes (or is it a joke?) about running for an unconstitutional third term as president. Regardless of occasional and thinly veiled messages to the contrary, their behavior only supports the notion that their personal philosophies are one of Darwinian libertarian anarchy and self-aggrandizement. The only thing they value more than money is their power and ability to control their environment. Without objective moral values, they resort to value people only insofar as they are loyal to them personally. As Vince protected Pat Patterson, so did Donald protect Roger Stone.
The fate of the United States is far more serious than that of a company like WWE, obviously, yet the parallels between the chief executives of the two entities are remarkable.
There are noticeable differences, too, though, if only relative to their differences in power. Despite his hubris, Vince seems capable of warmth. He cries talking about the Ultimate Warrior after he died. He gets emotional talking about his dad. He gets emotional when he feels appreciation for his son (even if it requires his son jumping off a cage dozens of feet high). He takes Ric Flair, who in two separate eras was a key talent in a rival company, as an adopted family member. He’s able to reconcile with even his most disgruntled former associates, like Bret Hart, Bruno Sammartino, and the aforementioned Warrior, for reasons that are partly but seem not entirely driven by business. In response to tragedies, whether national ones (like 9/11), or even tragedies he arguably bears responsibility for (like the deaths of his active wrestlers), he seems genuinely affected, but also defensive. And indeed, Vince manages to keep his stream of consciousness away from Twitter, using it most memorably only to wish friends and family a happy birthday.
Certainly, too, Donald must be envious of Vince’s class B shares. Class B shares are even better than the Electoral College. If only the president too personally held the majority of the voting power in the country, as Vince does in his company. Annually, not just every four years, Vince gets to reelect himself Chairman. As long as Vince retains a small portion of his stock, he can’t be removed from office or even told what to do, no matter the opinion of any number of average people.
What if the biggest economic booms in wrestling aren’t just about creating stars?
Common Wrestlenomics wisdom tells us economics in the industry are largely a result of star power promoted through strong media distribution.
But what if there’s another more important factor that comes first, from which stars are created almost as a side effect?
Maybe the greatest explosions of popularity happen when the usual expectations about what pro-wrestling is get upset.
If you’re a long-time wrestling fan my age or a little older, you lived through this. The two biggest booms for the World Wrestling Federation (now WWE) began in 1985, then again in 1998. Each period made the company more popular than ever, set business records for a few years, then dissipated.
Vince McMahon arguably transformed wrestling into a more showy, ridiculous style of entertainment. No doubt there were debts to other territories (like Memphis) but “Vince Jr.”’s WWF leaned hard into more gimmicky, larger-than-life events with more colorful characters who came ready to be merchandised. Less concerning for Vince was the longstanding will in the business to preserve the mystique of wrestling and to keep audiences wondering what was real and what wasn’t.
From Vince’s perspective, he probably thought the wrestling he inherited from his father’s generation was boring: just a bunch of guys rolling around in their underwear. Perhaps as well as to combat his own insecurities about his work, he wanted to bring his form entertainment to become accepted as a just another member of “show business”.
WWE revisionist history would tell you this was when Vince rescued “rassling” out of the smoke-filled auditoriums and into glitz and glamour, with updated TV programs, consumer products, and celebrity-studded Wrestlemania events. This is when he invented Sports Entertainment.
In reality, he did transform what had been a simpler, more regional business into a national business. He applied higher production values and a more outlandish and marketable creative approach. And Vince did use celebrities from other walks of life with success: people like Mr. T and Cyndi Lauper. He jarred expectations about what pro-wrestling could be.
And maybe that discord brought out the boom of the mid-1980s as much as the charisma of Hulk Hogan and other supporting characters like Andre the Giant, Roddy Piper and “Macho Man” Randy Savage.
Following the first Wrestlemania in 1985, despite the simulated violence, WWF very much marketed itself at kids. The company’s “go get ’em champ” spot, featuring Bret Hart, is a memorable and effective bit of advertising directed at kids.
Through the early 1990s, there were definitely places the WWF wouldn’t go as far as getting too violent or too vulgar. There were limits on the content. Its major competitor, World Championship Wrestling, vying for the same demographic, acted similarly. As a result, the forbidden elements became an opportunity, especially in a culture where the kids of the late 80s and early 90s were reaching their teen and young adult years.
Through the mid-1990s, the audience was deprived of a spectacular element, not all that different from psychology around how, more intentionally, the audience is deprived of a certain element in various wrestling story-lines where, for example, the audience is deprived of seeing a babyface win a title — and, ideally, business is drawn out and peaked until finally there’s a new champion.
By 1997 or 1998, the edginess opportunity for the WWF was ripe to be capitalized on, along with the advent of new top stars like “Stone Cold” Steve Austin and The Rock. The open secret that Vince was really in charge was finally confronted on-screen as he too took on a valuable heel character. On what was once largely a kids’ show, Austin swore, drank beer, and raised his middle finger. There was more blood and violence than previously allowed. Rock popularized catchphrases and new euphemisms. Women in the WWF were more hypersexualized and objectified than ever. Taking inspiration from the lower profile Extreme Championship Wrestling, Vince again broke expectations about what pro-wrestling was.
Maybe the exploitation of this edginess opportunity was really the catalyst for the economic boom we now call the “attitude era”; and stars like Austin, Rock, Vince, Triple H, and Mick Foley were essential, but wouldn’t have driven so much revenue without the cultural momentum that coincided with the peaks in power of other vulgar media stars like Jerry Springer, Howard Stern, and the animated kids of South Park.
Obviously this kind of cultural opportunity isn’t the only way to boost business, but maybe it’s the way to boost business in the biggest way. There are examples of a more pure star development that increased business and which don’t seem to coincide with some kind of broad transformation of pro-wrestling’s expectations. The rise of Kazuchika Okada and Hiroshi Tanahashi in turning around New Japan’s business early in the 2010s is one example. The emergence of Místico as huge star in the mid-2000s for CMLL is another. Around the same time John Cena and Batista were well-developed stars who strongly helped a WWE that needed new heroes after the exits of Austin and Rock. Maybe the peak of WCW business in 1996, though, does have something to do with wrecking expectations. That’s when the generation’s biggest wrestling star and supposed good guy, Hulk Hogan, turned heel and helped form the very marketable New World Order.
The obvious question to ask now is: Is there a transformation opportunity like the ones found in roughly 1985 and 1998? For WWE or All Elite Wrestling or any other company?
I’m not sure, partly because each one of these transformations, while driving tremendous short-term value, seemed to permanently spend something creatively for the wrestling business, long-term. The mid-80s boom, with its willingness to be more cartoon than sport, spent some of wrestling’s mystique and wonder — even if that erosion was inevitable with the internet on its way. The transformation of the attitude era, and the costly “Monday Night War” that WWF waged with WCW, spent the use of vulgar and more adult-oriented content. The competition between the two companies also normalized a maximalist compulsion for angles in nearly every TV segment: a habit that lives on today to the detriment of the industry at-large. What made the attitude era’s content work economically was that it was opposed to what the content had been previously. In that sense, you cannot bring back the attitude era much more than you can burn a matchstick twice.
Or has such an opportunity to spike revenues by disrupting expectations already passed?
Pro-wrestling is a male-dominated field. It’s mostly men who watch and mostly men who participate. And, if only in the memory of most in the U.S., men are always the big stars.
So maybe the elevation of women a few years ago — attempted, but like so much of what WWE’s done creatively this century, not well-executed — was a massive opportunity. Maybe that was the next upsetting of expectations about what pro-wrestling can be. In July 2015, fifteen years after the height of the attitude era, which was fifteen years after the birth of Hulkamania, WWE brought Becky Lynch, Sasha Banks, and Charlotte Flair to its main roster in a move since branded as the “women’s revolution”. Bayley, who seemed to have great potential to appeal to kids, followed those three women to the main roster the next year.
The debut and success of the reality series Total Divas in 2013 likely drove more women to flagship WWE programming, and set the stage. The timing coincides culturally with the “Me Too” and other feminist movements. Within wrestling itself “#GiveDivasAChance” was a popular hashtag the preceded the supposed revolution, and aggregated criticisms about how women in WWE were compensated, presented, and given TV time. The timing lines up too with the popularity of Ronda Rousey in the UFC, who broke expectations about what was possible in MMA, and who could’ve come to WWE in 2018 to extend the wrestling boom, had it happened.
The degree to which Becky Lynch did catch on, to Vince’s surprise, for WWE in 2019 might’ve just been a remnant of what was possible a few years earlier and squandered. And maybe in the line of the rock ‘n wrestling Hulkamania era and the attitude era could’ve been the women’s era for WWE, if only the company had creative leadership savvy enough to still effectively cultivate star power.
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Leadership with credibility in sports and media: AEW President Tony Khan’s credibility from working for the Jacksonville Jaguars and Fulham FC was likely a great help to allowing AEW to get TV deals in the U.S. (WarnerMedia) and the U.K. (Sky and ITV). Besides being backed by a very wealthy family, this is what sets AEW apart from other newcomers to the U.S. wrestling industry since 2001.
Leadership with a strong understanding of industry history: Khan comes to the wrestling industry not only with experience from sports and media business, but with a strong understanding wrestling history, and a genuine enthusiasm for the medium. He’s a wrestling fan much in the sense many disenfranchised WWE fans are, which distinguishes him from Vince McMahon. These qualities too are lacking in leadership of other major players to enter wrestling since 2001.
Financial backing: Tony Khan’s father, Jaguars owner Shahid Khan is a billionaire with a net worth reportedly multiple times greater than that of Vince McMahon. Without the financial backing to start the company, a new wrestling company like AEW couldn’t happen.
Willingness to curry favor with bellwether fans and media: As the internet has become more ubiquitous and the wrestling fan base has become smaller, the influence of wrestling media and “online” fans who have often been dismissed as insignificant, has become greater; I believe this is especially the part of the wrestling mind-share that’s grown frustrated and distrustful of WWE. AEW leadership seems to have established largely good relationships with this part of the fan base and media. The most influential member of wrestling media is Dave Meltzer, writer of the Wrestling Observer Newsletter. His relationship with AEW leadership seems especially tight. Meltzer’s coverage of the new company has been largely favorable, which, whether calculated or not, may secure whatever access he may have with AEW, and encourages continued favorable analysis. To contrast, WWE engages with wrestling media far less, at least publicly. WWE seems to prefer mainstream media outlets, knowing wrestling media will eagerly aggregate any morsels of news and comments published elsewhere. This is largely the case for AEW stories also, yet AEW talent and executives are allowed to be interviewed by wrestling media far more frequently than their counterparts with WWE. In sum, the access AEW gives wrestling media, relative to the lack of access WWE grants, probably respectively encourages more favorable coverage of AEW and less favorable coverage of WWE than would exist otherwise. I suspect WWE underestimates the value of this factor, which has become gradually more significant over time, and which may have been more reasonable to overlook or dismiss in previous years.
WEAKNESSES (INTERNAL — HARMFUL)
Wrestler-executives in dual roles lack prior executive experience: In order to entice key talent to sign with the startup, Cody Runnels (Cody Rhodes), Brandi Runnels (Brandi Rhodes), Matt Massie (Matt Jackson), Nick Massie (Nick Jackson), and Tyson Smith (Kenny Omega) were given Executive Vice President roles. In particular, Young Bucks brothers Nick and Matt, and Cody did an impressive job promoting themselves before joining AEW. They succeeded in putting on an independent pay-per-view and live event, All-In in September 2018. While successful self-promoters, none of these five executives have prior experience in leadership roles in a wrestling company or another type of company comparable to AEW.
Female stars: The female talent pool in the current wrestling industry isn’t as deep, probably for systemic reasons. AEW’s women’s roster pales in comparison to WWE’s wealth of talent in that area; arguably AEW’s women’s roster is outshined by the female talent Impact Wrestling, despite the latter’s lower profile. Kylie Rae, who was seemingly at the beginning of a strong push, abruptly left the company last year. Recently AEW has been especially hurt by injuries and international travel restrictions. However, recruitment seems to be the root problem. Since debuting on TNT in October, the company has even missed on multiple talented women who were available but signed with WWE.
Over-supply of talent: While taking into consideration WWE has a larger roster and far more hours of in-ring content to fill, the average WWE wrestler who had at least one televised match from January to June has more matches than the average AEW wrestler, even when eliminating wrestlers who have had only one or two matches. In this comparison, the median WWE wrestler had 4 matches in the six month period, while the median AEW wrestler had 3 matches. Considering WWE’s apparent willingness to stockpile talent in part to keep them away from the competition, this is surprising. The five key talent-executives, who’ve cultivated a lot of relationships with other wrestler throughout their distinguished careers, may have pushed the company to hire more talent than it needs in a competitive talent market that’s increasingly expensive. Cody Rhodes last year in a public talk openly embraced nepotism as a hiring strategy, saying “I believe in nepotism, I believe in giving your friends jobs. I wouldn’t be here if it wasn’t for nepotism.” The on-air performance of Chief Brand Officer Brandi Rhodes doesn’t justify the amount of air time and character revamps she’s gotten, but considering her executive role in the company there seems no escaping the situation. Some wrestlers have apparently been acquired due to their ability to cover other office or production roles, which may be efficient. However it’s not clear AEW needs 70 to 80 wrestlers on hand to cover three hours of weekly in-ring air time.
Developmental strategy: Will recruiting from the indies and free agents be enough? AEW is still a young promotion but it barely has a developmental strategy compared to WWE, which currently has a U.S. and U.K. training center, as well as relationships with a number of independent companies. Nor does AEW have any strong working relationships with other promotions currently. Cody is participating in the Nightmare Factory wrestling school, which has its first classes later this month, but the school isn’t an official AEW developmental facility, rather it seems to be more of a rebranding of QT Marshall’s school.
Legacy IP: Similarly, the start-up nature means the company began with no video library or legacy of legendary intellectual property. AEW’s made no acquisitions in this regard. WWE owns much of the U.S.-originated valuable video IP. Newer video libraries belonging to Ring of Honor and Impact Wrestling (especially the former) may be under-monetized but a favorable deal among competitors seems unlikely, nor does AEW currently have the infrastructure, like a streaming service, to monetize the content.
OPPORTUNITIES (EXTERNAL — HELPFUL)
Disenfranchised fans and talent: This is one of the essential factors that makes AEW as viable as it is. By delivering a chronically unsatisfying flagship product, WWE damaged its trust relationship with many fans through the last two decades, especially in the last several years. Some WWE talent who pursued working for the company as their livelong dream found themselves unfulfilled creatively. There’s a market of fans hungry for a comparable alternative to WWE and a pool of motivated talent interested in leaving or altogether avoiding the industry leader.
Increasing value of live sports content: As is the case for WWE, there’s no strong sign the value of live content will decrease in the coming years. AEW’s average annual value per hour in the U.S. is one-sixth that of WWE’s flagship programs, yet even as it’s opposed head-to-head by WWE NXT, AEW Dynamite delivers just under one-half of the total audience of Raw and more than one-half of the 18-49 audience. AEW should be able to close that gap in future negotiations if its brand and viewership remain strong.
International markets: AEW has strong distribution in the U.S. (TNT), Canada (TSN), and the U.K. (Sky and ITV) and has deals in some major European countries through WarnerMedia. The company hasn’t yet made a deal in India, which is WWE’s #2 market. Other markets like Australia, Ireland, South Africa, Latin America, Japan, Middle East-North Africa, New Zealand, and China are proven TV markets for WWE that need to be covered. Currently the only way to watch AEW Dynamite in these markets is with a subscription through FITE, which isn’t sufficient for adopting new fans.
Improved monetization of peak events: AEW produces four annual peak events, offered exclusively on pay-per-view. PPV distributors take a sizable split of the revenue for providing distribution. Is there a way in the short- or long-term for AEW to take this area more in-house? Starting a DTC video service like the WWE Network would be an expensive investment. The company doesn’t have nearly the video library to stock such a platform with. Would it be viable to acquire or license other wrestling companies’ libraries? Would DTC iPPV be viable without conflicting other partnerships to sell pay-per-view events directly to consumers on the internet rather than through iPPV distributors like FITE and B/R Live with whom AEW must share revenue?
Working relationship with New Japan: There are obvious synergies here. Well-promoted matches between AEW and NJPW stars would be a major attraction for wrestling fans in both the U.S. and Japan. Many of AEW’s top stars are former top stars with New Japan. Kenny Omega speaks English and Japanese. Their respective audiences are likely well aware of the other companies’ top stars. New Japan is eager to gain more ground in the U.S. and other English-speaking markets more familiar to AEW. There are two major obstacles in the way: 1) New Japan’s multi-year working relationship with and loyalty to Ring of Honor, which is greatly threatened by AEW. 2) NJPW and AEW EVP Omega seem to have a troubled relationship after he left in 2018.
THREATS (EXTERNAL — HARMFUL)
WWE competition: WWE is the strong, well-funded, long-time industry leader in wrestling. Despite “we’re focused on us” messaging to the contrary, WWE is clearly eager to defend its position and would like to diminish AEW into obscurity. NXT was moved off the WWE Network and onto the USA Network, probably for little short-term revenue, in order to go head-to-head with AEW and diminish AEW’s viewership. WWE is willing and able to bear the expense of stockpiling talent to keep them from the competition. A contributing motivation for introducing the NXT UK brand was to stunt potential competition from a relaunched World of Sport brand in the U.K.; WWE was successful in disabling that competition.
Covid-19: The pandemic continues to dampen momentum the company might otherwise gain. The flagship show now has had more weeks during the pandemic era than before it. Like WWE, AEW’s content is harmed by the lack of large live audiences. Potential business partners may also be hesitant to commit amid broad economic uncertainty.
Fragmentation among EVPs: Creative or business disagreements among AEW’s four founding talent-EVPs (Cody, the Young Bucks, and Kenny Omega) could cause problems. Apparently these four began with equal positions. What happens if or when one or more gains more influence or power than the others? This could result in key talent leaving the company or have negative effects on morale.
Drug policy: Talent contracts reportedly allow for drug testing, but AEW has no known policy or testing. This may be preferable for talent. And it’s true the wrestling culture isn’t as troubled by drug abuse as it once was. Still, wrestlers who punish their bodies regularly and travel frequently are almost certainly at disproportionate risk to abuse substances like painkillers, recreational drugs, and performance-enhancing drugs. Additionally, despite the predetermined nature of matches, wrestlers are in competition with one another. Athletic physiques and the ability to recover from and work through injury are components in that competition. WWE enacted its current, probably minimal, drug policy in the mid-2000s only after suffering loss of human life and public relations disaster.
Wide margin leader in name ID among pro wrestling brands: WWE has well-established global appeal and distribution. If you know any pro wrestling brand, you likely know WWE. Its programming is on TV in many countries around the world, more widely than any wrestling brand. Pre-Covid, it’s the only company that does such broad international tours. This factor is a benefit to establishing and maintaining business partnerships, adopting fans, and succeeding in talent recruitment. This factor poses a challenge to any wrestling competitor.
Strong legacy intellectual property: WWE owns its character likenesses, owns its historical video library and the video libraries of nearly all pre-2000 United States wrestling of note. Most of the 20th century U.S. video history that they don’t own has unclear ownership or is so obscure as to have minimal value.
Secure financial outlook: Large guaranteed revenue sources from long-term agreements for broadcast rights and from twice-annual events for the Kingdom of Saudi Arabia makes the majority of the company’s revenue stable and predictable.
Established direct-to-consumer streaming video service: WWE Network is itself not just a revenue source but a valuable asset and a direct line to sell consumers its vast library of new and old content, to compete for time, and to build loyalty. It may also provide consumer data that allows the company to better market to its audience.
Early social media “land grab”: A directive from the CEO in the late 2000s to “get more than our fair share” of social media space resulted in WWE investing early in an area that’s increasingly relevant, especially with younger audiences. It’s still unclear how time spent on social media can be better monetized, but when or if there’s a way, the company should be well-prepared to take advantage.
Promotion of personalities in non-wrestling media: The company produces three active reality TV series distributed via NBCUniversal (Total Divas, Total Bellas, Miz & Mrs.) and produces films through its WWE Studios division. The reality series star WWE talent; films often do as well. Total Divas likely drove many female viewers to WWE flagship programming.
WEAKNESSES (INTERNAL — HARMFUL)
Demonstrably challenged at developing new, youthful star power: The economic history of WWE and the rest of the wrestling industry largely hinges on the popularity of its biggest stars. The company has struggled to create a star who’s had a positive long-term effect on consumer revenues since the elevation of John Cena in about 2005. I wrote more about this here: WWE Hasn’t Created Strong New IP In Over 15 Years.
Head of creative is the controlling shareholder, chairman, and CEO: Due to class B shares granting him 10x voting power over all shareholders who aren’t McMahon family members, Vince McMahon can sell his ownership down to a small minority of all shares and still control the majority of the voting power. Vince seems determined to control the creative direction of WWE’s most valuable content for the rest of his life. Under that direction the company’s core content has disenfranchised some fans and some talent for years. This has exacerbated in the last few years as alternative wrestling brands have gained in global appeal. TV viewership, merchandise sales, ticket sales, and streaming subscriptions have declined in recent years, likely as a downstream effect of the aforementioned weaknesses.
Over-saturation of WWE content: While generating an increasing number of weekly first-run hours of in-ring content in pursuit of more media revenue, WWE is over-saturating an increasingly competitive market for wrestling time and entertainment time in general. While taking advantage of the growing value distributors are willing to pay for live content, there may be a balance that needs to be struck in order to protect the long-term health of the brand, as consumers struggle to keep up with WWE’s sprawling content offerings, including a weekly three-hour Raw program which has trouble retaining its audience in the third hour.
OPPORTUNITIES (EXTERNAL — HELPFUL)
Further peak event monetization: “Pay-per-view” events, where matches built up on Raw and Smackdown culminate, are primarily self-distributed on WWE’s direct-to-consumer video service, the WWE Network. At the company’s current level of popularity, those events may be better monetized by being sold for guaranteed revenue to a major streaming platform (e.g., Peacock, ESPN+, Amazon Prime). In that case, the WWE Network can still likely be a profit generator with a lower subscriber base by continuing to offer access to the company’s enormous video library and other valuable new in-ring content, like the NXT brand’s peak “Takeover” events. Selling the main roster “PPV” events will likely be one of the early important tasks for new WWE President and Chief Revenue Officer, Nick Khan. WWE tried to make a sale in early 2020 but negotiations have stalled since Covid.
Growing value of live sports content: WWE has seven hours of weekly live content on major cable and network programming. Five of those hours (Raw and Smackdown) are already highly monetized. The other two hours belong to WWE’s newer third brand, NXT, which are far less monetized and stand to gain in value in future negotiations. Pertaining to all seven hours, there’s no strong sign that the value of live sports-like content will diminish in the coming years.
Public perception: Wrestling brands historically have had trouble with public perception for a variety of reasons. The company has made some headway in this area in recent years, with campaigns like “The Hero In All Of Us”, rating most of its programming TV-PG, and other forms of community outreach and philanthropy. There’s additional opportunity still to attract younger and more affluent audiences. Under a more disciplined creative leadership, the company could develop stars that attract younger audiences and could prove to more affluent audiences that WWE is more than a brand of simulated violence and sophomoric humor; rather, that it can, without alienating its captive fans, tell exciting stories through sports-like drama in a more sophisticated manner compared to what WWE normally delivers.
THREATS (EXTERNAL — HARMFUL)
Emerging competing wrestling brands: All Elite Wrestling is the company’s strongest direct competitor since World Championship Wrestling closed in 2001. AEW is less than two years old but already has strong distribution (TNT domestically and other WarnerMedia networks internationally), worthy leadership, and superior consumer credibility among its smaller audience. The potential alignment in the timing of WWE and AEW TV contract negotiations may result in unfavorable comparisons. WWE also competes for talent and, to a lesser extent, market share with other companies like New Japan Pro-Wrestling, Impact Wrestling, and Ring of Honor. Competition from other wrestling companies has immediately resulted in an increase in the cost of talent and in the quantity of talent WWE keeps under contract.
Covid-19: The ongoing pandemic continues to threaten WWE’s media content and the businesses of its partners. Covid has created uncertainty for the live event business and wiped out an always lucrative Wrestlemania week. The company’s media content is compromised by preventing live audiences from being in attendance, which negatively affects the quality of the content. Covid may also impact consumers broadly, although WWE’s direct-to-consumer businesses like the WWE Network and online merchandise sales have held up so far.
Media partners might pay less for WWE content to pursue more in demand properties: In order to compete with other networks to acquire and retain larger sports brands (like NFL, NBA, MLB), partners might decline to make large offers for WWE’s broadcast rights, especially if WWE’s viewership continues to under-perform.
Fragmenting media economy: An increasing number of entertainment options threatens to compete with WWE for consumer watch time, potentially devaluing media rights value and other parts of business.
Employee/contractor and other possible legal challenges: While none of the ongoing litigation WWE is involved in appears to pose a great threat, the company’s greatest legal liability is probably in its continued classification of wrestlers as independent contractors while exuding great control over their work. There’s no active lawsuit of this nature. Statutes of limitations and performers’ desire to stay on good terms with the company even after termination are a deterrent. However we’re entering an era where WWE’s virtually monopolistic grip on the wrestling industry is releasing, and there are more alternate ways to make a great living as a wrestler. Furthermore, WWE’s stated plans to expand training centers and developmental brands into territories throughout the world (EVP Paul Levesque’s “Global Localization” strategy) would likely require a growing number of contracted wrestlers, thus increasing the population of potential plaintiffs. WWE could reduce this risk either by reducing the degree of control it holds over talent or by converting wrestlers (there are currently around 300 of them) from contractors to employees. The latter would be quite expensive, and would significantly impact short-term shareholder value, but would be within their projected future profit margins.
What do you think? Did I leave something out? Tweet me @BrandonThurston or email firstname.lastname@example.org.
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