Analysis: What drove the deal between WWE, NBCU Peacock?
The WWE Network is moving to the NBCU Peacock Premium streaming service, in a deal valued at more than $1 billion over the next five years.
What’s in it for both sides?
For WWE, it’s not necessarily money. The average annual value of the deal would be in the $200 million-plus range, which is roughly what the company has brought in each of the past two years – in 2019, the company reported $184.6 million in revenues from its subscription network, down from the $199.3 million it reported in 2018.
OK, so, a little more money – and it’s guaranteed, up front, not dependent upon if you have a hot angle heading into WrestleMania, if Becky Lynch goes on maternity leave.
It’s similar to the deal that UFC made with ESPN.
There’s a certain level of excitement to having to build up stars and storylines to sell a pay-per-view, but boom-or-bust is a helluva way to live.
WWE gets money.
They also get more mainstream exposure.
You’d have to assume that NBC is going to want to wring every possible dollar of value out of the billion-plus it’s committing over the next five years.
Might that mean house spots on prime time, NFL, NASCAR, Premier League pushing the WWE Network?
I’d be surprised if not.
Looking at the Peacock side of this, then, at the baseline, the new streaming service gets 1.1 million WWE Network U.S. subscribers – it’s hard to imagine any of them not migrating over, because the cost of the basic package will actually be half, at $4.99, compared to the current $9.99, when the move ends up being made in March.
And those subscribers, then, get inundated with commercials for, guess what, Peacock, in addition to Peacock being able to charge a little more for its existing ad inventory because of the increase in subscribers.
The toughest thing in business is the cost associated with the acquisition of new customers.
NBCU is telling us 1.1 million sets of eyeballs is worth somewhere in the neighborhood of a billion dollars over five years.
Back of the envelope math there: roughly $900 a year per set of eyeballs.
Now you know what your time on the couch is worth to people with money.
Final piece of this analysis: what’s in it for you?
If you’re still a cable subscriber, it’s a little easier to be able to access WWE Network.
You won’t have to flip over to your Roku or Fire stick.
And as mentioned, you save five bucks a month.
And there is the upsell to $9.99 a month – what you’re paying now – to go ad-free.
TL; DR: you save money, save a few seconds when you flip the channel to WWE Network, and two sets of rich people give each other money.
Story by Chris Graham