WWE Network posts pitiful third quarter numbers

I don’t want to say that WWE Network is struggling, but the latest subscriber numbers revealed by WWE might be best described as disappointing.

WWE Network adds just 31K subscribers (4%) during last quarter. Up to 731K total. But minimal growth since spring and lots of churn.

— Eric Fisher (@AEricFisher) October 30, 2014

As a result, WWE Network has removed six-month commitment requirement. Now $9.99/mo, cancel anytime.

— Eric Fisher (@AEricFisher) October 30, 2014

WWE Network had gross subscriber add of 286,000 during last quarter to end up with net add of 31,000. Lots of churn.

— Eric Fisher (@AEricFisher) October 30, 2014

Good news: we added 281,000 subscribers! Bad news: we lost 250,000 subscribers!

And keep in mind: this quarter was the first in which WWE Network was launched overseas, which resulted in a net growth in their subscriber base of just 4%. Last quarter, without the benefit of international markets, WWE only added a net total of 33,000 subscribers. So essentially, they opened up  170 additional international markets…and added fewer net subscriptions than they did solely in America last quarter. A 1 million subscriber number has been set as the break-even point for WWE Network and right now that looks like a goal that’s becoming increasingly unreachable.

And this is where the removal of the “six month commitment” can come back to bite WWE. While many people who religiously watch their programming and buy every PPV are already subscribed to the network, there’s still a segment of the fanbase that isn’t. And instead of paying their $59.99 (or whatever it is now) for a PPV, those viewers can now pay $9.99 for one shot for a PPV, potentially depriving WWE of a good chunk of revenue they would normally be getting from PPV sales. Maybe the viewer likes WWE Network and sticks around. Maybe the viewer isn’t a fan, and lets their subscription lapse. Maybe the viewer only buys WWE Network for one PPV, and doesn’t even bother looking at the other features.

All in all, this isn’t good – but it shows the danger of going all-in on a relatively risky new venture. It’s also a warning shot to the networks looking at transitioning to an online streaming service. You think HBO isn’t looking at what WWE Network is doing and trying not to make the same mistakes? Same deal with ESPN, if they ever put together a WatchESPN package for non-cable subscribers. They’re not going to completely undercut their business to satisfy viewers like WWE did. Instead of giving viewers a discount with their service, viewers are likely going to need to pay more of a premium – and they will.

As revolutionary a service as WWE Network is, and as much as it has to offer, it still hasn’t proven to be a business model that works.