Tag: swot

All Elite Wrestling SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats

This follows up on the recently posted WWE SWOT Analysis.

STRENGTHS (INTERNAL — HELPFUL)

  • 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.
  • Social media: The start-up nature of the company means it essentially began with zero branded social media touch points. Its social media execution has also been criticized.
  • 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.

What do you think? Did I leave something out? Tweet me @BrandonThurston or email brandon@wrestlenomics.com.

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WWE SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats

What’s a SWOT analysis? (Wikipedia)

STRENGTHS (INTERNAL — HELPFUL)

  • 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.
  • Gaming investments: If gaming space is the next frontier in new media, WWE may benefit from investing. The company has more cash than usual on its balance sheet. There are obvious synergies possible. WWE has a long history of selling its IP licenses in console gaming and more recently for mobile games. WWE’s overall consumer base is probably disproportionately interested in gaming.
  • 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 brandon@wrestlenomics.com.

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