With WWE's expansion this past decade, the company now more than ever is focusing on how they can make newer deals for both the United States and international markets' TV rights. WWE Co-President George Barrios sat down with Jason Bazinet at the Citi 2020 Global TMT West Conference last week to compare the two markets, and what kinds of questions go into determining where WWE should or should not make deals.
"I'm working in multiple industries, and the fundamentals aren't all that different," Barrios began. "The first input is how big is the particular market in terms of how much the end consumer is contributing. In the U.S., it's $200 billion of subscription advertising revenue that supports video... That $200 billion is the largest media entertainment market in the world. The second thing that goes into it is the regulatory framework that underpins the value chain. For example, in this country, there's mandated that you know has no cross-ownership. That's good for the scripted, unscripted, and live kind of suppliers. The third question is, how strong are you relatively in each market. So, how big is the market? What's the structure of the marketplace? How much wholesale pricing power do you have?"
In addition to that, Barrios describes how they localize their content for other countries. Barrios discussed how factors like growth, advertising, and sponsorships play a key role in determining their business contributions.
"If I were thinking about investing in the WWE, I would try to form a perspective on three things," Barrios noted. "Number one, how valuable do I think live rights are going to be within the U.S. over the next few years. Number two, how much growth do I think there will be in the media and entertainment sector outside the U.S., which reflects 5-10 years. Then number three, where do I think WWE stacks up, in terms of the relationship between its engagement and its ability to monetize through sponsorship and advertising.
"Our perspective is, live rights are going to become even more valuable in the U.S. over the next 5-10 years. Our perspective is that 60-70% of the growth and global media is going to come outside of the U.S. over the next 5-10 years. We do believe we over dex on the sponsorship side relative to our engagement, so when we talk about investing, you see us invest in a lot of things that line up with those three opportunities. It could be localizing content, digitizing largely, understanding our consumer, growing the audience, strengthening the brand, and strengthening our Superstars and their brands. All those things are geared towards those three monetizing opportunities."
Barrios also discussed the WWE Network tiers and how websites like YouTube are a window into the content that newer fans can sign up and see more of. Since revenue for the WWE Network was down this past year, his goal among others is to change its layout to have more fans subscribe to the network. He also mentions new tier ideas that would combine the content as well as purchasing other things such as apparel and tickets.
"If you look at just the year-over-year basis, this was the first time we were down year-over-year," Barrios informed. "If you said to me, why do you think that is, I'd say it's wrapped up into the engagement discussion...the engagement has to work for everything else to work.
"Today, if you think about it, you're going from YouTube. If you're a fan, you're experiencing (WWE highlights) on YouTube, or FOX and you don't think you want to subscribe to the network because the first thing you're hit with (on the WWE Network) is a credit card (page). You don't know what product is, we can tell you what it is, but you don't know. We think the ability to bring someone into the service where you can experience the product, but you can't experience all the content within that period of time gets you more comfortable to eventually say I'm willing to give into it. That to us is a sea change on how we move consumers through the content.
"We've talked about a premium tier, where we can wrap it together to create value for the consumer and create value for us. If you're buying on WWE Shop and you're purchasing tickets over the web and you're a consumer of our videos, there's an experience we can give you some additional content to bring additional perks to those activities and bring them all together. We think we can create a lot of value for our biggest fans."
You can view George Barrios' full interview above via WrestleNomics. If you use any of the quotes in this article, please credit Wrestling Inc. for the transcription.