The UFC Fight Pass is projecting 100,000 subscribers at $9.99 per month, worldwide by the end of 2014. The WWE Network is projecting between 1 million and 2 million subscribers in the United States (the 50 states and Puerto Rico, the only places it will be launched at first) by the end of 2014. They project in the U.S. alone, they will have 2 million to 3 million subscribers by the end of 2015.
Even at those lofty numbers, between the start-up costs and the cannibalization of PPV, a WWE SEC filing stated that the company was expecting profits to be lower this year than last year.
“We expect the network will reduce OIBDA and net income in 2014 as the initial ramp in subscribers and revenue is not likely to be sufficient to offset both the foregone pay-per-view revenue and the incremental, direct expenses associated with a network launch, such as programming, marketing, customer service and content delivery costs,” wrote WWE’s Chief Financial Officer George Barrios.
Long-term, based on the U.S. market, they project in 2015, when there are no longer the start-up costs, that the network would break even with 1 million subscribers, earn $50 million in OIBDA (pre-tax profits) with 2 million subscribers, and earn $150 million in OIBDA with 3 million subscribers.
They are projecting that the network will, in the U.S., cannibalize about $60 million annually in money that had previously been taken in, largely in PPV and DVD revenue. They expect another $15 million annually in cannibalization of those revenue streams for 2015 when the network expands internationally. The costs per year right now are budgeted at $65 million, of which about $20 million is earmarked for programming.
Essentially, for 2015, they need $140 million in revenue to the company to break even. While that would figure to be 1,167,000 on a worldwide basis, because of splits in revenues, depending on what percentage use outside streaming devices, it would really be a number somewhere between 1.17 million and 1.67 million worldwide subscribers
The plan is to launch the network outside the U.S., in the United Kingdom, Canada, Australia, New Zealand, Singapore, Hong Kong and the Nordic countries in Europe, either at the end of 2014 or early 2015.
After the initial launch, they are projecting with 250,000 subscribers outside the U.S., they can break even on international revenue. With 750,000 subscribers internationally, they can hit $25 million in new OIBDA and with 1,500,000 subscribers internationally, they can hit $85 million in new OIBDA.
