WWE Network Is the First to Ditch Traditional Cable

Will other entertainment brands do the same?

For the first time, there’s a major entertainment brand creating its own service for over-the-top video, and it’s ready to rumble. On Feb. 24, the WWE Network goes live on every device with an Internet connection. It’s been nearly three years since the network fruitlessly began looking for traditional cable distribution; with its app-based digital offering, WWE is taking the value proposition straight to fans—and the rest of the digital video industry couldn’t be happier.

“It’s a courageous and brilliant opportunity,” said Jason Krebs, head of sales at Maker Studios. “It’s going to work out really well for them.” Krebs, a vet of the perpetually nascent digital television world, said the WWE deal will set the stage for content owners to roll out direct-to-audience services that don’t have the tether of a cable subscription. “Everybody talks about how cord-cutting isn’t going to happen, but generally those are the same people who said that tablets weren’t going to be a meaningful consumer experience and that we’d never get to current levels of computing power,” Krebs said.

Beyond industry enthusiasm, though, the math is pretty heavily in WWE’s favor. For comparison, Netflix’s growth to 33 million domestic subscribers has made plenty of headlines, and Hulu Plus crossed the 5 million subscriber mark after three years. “Our goal is to get 1 million subscribers this year, and if we get 2 to 4 million, it’ll just be transformative to our business,” said Perkins Miller, evp of digital media for WWE. “That 1 million number enables us to break even, and we think the 2 million number is very reasonable.”

Assuming they hit their marks by the end of the year at $9.99 per sub per month, the “very reasonable” sub count would give WWE revenue of about $240 million for 2015 just from that one service—the rough equivalent of a 20-cent affiliate fee for a fully distributed cable network over the same 10-month period—and that’s without bundling the product to consumers who don’t want it.

Of course, in addition to pay-per-view and library content, there are still the linear shows to manage—Raw, Main Event and Smackdown air Monday, Wednesday and Friday (on USA Network, Ion and Syfy, respectively). But WWE has been experimenting with nontraditional distribution for a while. Hulu Plus streams all three programs a few days after their live telecasts, and Miller said the current partnerships will continue. “For [Hulu], a rising tide lifts all boats,” Miller said.

None of this, of course, is a guarantee of success. Fan love and fan dollars are two different things, but it seems safe to make one prediction: If WWE can’t convince its fan base to try out single-channel digital distribution, it likely won’t bode well for anybody else.