WWE is completely becoming Peacock, now he wants to make more content

World Wrestling Entertainment executives said it was the best: WWE is not a tech company. Instead of working as a streaming service, you now want to recreate content.

WWE will host the Super Bowl wrestling this weekend with its WrestleMania event on NBCUniversal’s Peacock broadcast service. It is part of a more than $ 1 billion exclusive rights agreement that changes the long-standing entertainment company’s position to focus on its product and prevent wars in streaming.

“After all, we’re not a tech company and we shouldn’t try,” Stephanie McMahon, WWE’s director of brands, told CNBC. “We are a core content company and we want to do what we do best.”

Added CFO Kristina Salen: “Everyone has an advantage. There’s Disney +, Paramount +, Discovery +, but not everyone has branded content with a huge fan base like WWE. So we saw that there was a great demand for what we had to offer, and we could take that money and double it and do what we do best, which is content. “

The focus on content creation shows a kind of counter-narrative of transmission wars in which companies create applications and services loaded with movies and TV shows. WWE is abandoning its own streaming service and instead is focusing on doing new things that people can see on Peacock.

Content gaming is just the beginning of WWE in this new decade as it prepares for a post-Covid world with new revenue possibilities. But the future will also raise questions about whether WWE is a smart investment and how it plans to tackle one more competition that wants to threaten its market share.

Like the rest of the entertainment world, the WWE had to innovate on the fly after the success of last March’s pandemic. The company moved events to Florida to continue operating and save media rights. It didn’t fit any viewers transiting their pyrotechnic content to a more cinematic production around wrestling matches.

“It’s like a movie,” McMahon said after describing The Undertaker’s graveyard-style game last year. “And on top of that, the real innovation came with the investment in the Thunderdome,” an indoor complex built in Florida to host events.

“We experimented with drone cameras, pyros, augmented reality that we couldn’t have done before mostly because of living bodies in the actual bleachers,” McMahon added. “You’re going to do a lot of testing and learning what it makes sense to go ahead and try different things,” he said.

The real WWE transition began before Covid-19, when President and CEO Vince McMahon fired two critical executives in January 2020. Divergences around this change centered on seeing the future of Covid-19. ‘a different way.

In 2014, former WWE President George Barrios saw value in the company’s new streaming service. It cost $ 10 a month and helped the company move away from paying for traditional vision. But the WWE failed to grow subscribers, reaching about one million in the US.

WWE Network dismantled its operations in the United States starting in 2021 and signed with Peacock. The move provides live WWE events and a classic wrestling library for Peacock subscribers.

“It’s a big win for the WWE,” said media rights expert Dan Cohen. “The price is going down, so you expect subscribers and eyeballs to go up. They went out of technology and don’t have to keep up and updating the technology that changes every minute.”

Salen, the former chief financial officer of Etsy, was one of two new executives hired in 2020. He helped make Etsy public in 2015 and is now partly responsible for WWE’s financial future, including more merchandising, e-commerce and corporate sponsorships, which will feature new campaigns with longtime partner, Procter & Gamble.

In its fourth quarter 2020 report, WWE said it had a hit of $ 84 million and grossed $ 238.2 million. But even though WWE hosted most of the events without fan attendance last year, it still earned $ 970 million thanks to Fox Corp. royalties. and NBCUniversal.

WWE currently has a market capitalization of about $ 4 billion and is trading at about $ 55 per share. Salen said the WWE network didn’t lose money, but again, its C-Suite consensus focused on raising license rates around its content and stopping it working like Netflix.

“Just like we were the first to pay per view, first live to the consumer and now we are the first to go back to the aggregators,” Salen said. “We thought it was the right time. And over the next few years, we’re sure we’ll be right.”

Salen said a question he often gets from Wall Street: why should investors be interested in WWE shares?

“Investors know I decide to spend my time in places where I ultimately think there is value to be created,” he replied. “I think there’s this huge opportunity in the coming years to create more value for shareholders.”

WrestleMania 37 is scheduled this weekend at Raymond James Stadium, the site of the National Football League’s Super Bowl LV held in February. “

It is attended by 25,000 fans, and McMahon said the event will mimic many of the NFL’s Covid-19 protocols: pods, mask distribution, hand sanitizer. “Only the setup is different because we can have people on the ground,” he added.

The WWE, however, needs to get back into the areas and perhaps more so than the professional leagues. The company earns a significant portion of its revenue around live ticket sales and travels more often throughout the year.

“As soon as the spaces are open for business, we can start pushing that,” Salen said. “But we need there to be a critical mass of scenarios that are open to business to do that. And we just don’t see it now.”

WWE also has to control another company that wants to consume its market share. WarnerMedia’s Turner Sports property has been reinvested in wrestling with All Elite Wrestling (AEW). The network last hosted a major wrestling company in 2001 when it owned the World Wrestling Championship (WCW), which WWE bought.

AEW is led by Tony Khan, son of the owner of the National Football League team Shahid Khan, and has his financial support. And so far it is gaining praise for its production.

“Theaters are good,” Cohen said. “The quality is good. Where AEW is missing is in the star power.”

Internet talks suggest that the WWE will spend money to prevent AEW from achieving this mission. Asked about this, Salen said the rumors are not accurate. He added that AEW has more competition for its NXT ownership. This division is like the NBA G League for wrestlers.

“We’ve always had competition, it’s part of the game,” Salen said. “Internally, we pay a lot more attention to a seventh game in the World Series and whether Raw faces it.”

But while the WWE could once again face a significant challenge, it cannot stop the future. And among the main questions they face: how long will Vince McMahon continue as CEO? And who will replace him?

Her daughter suggested that it would be a collaboration of “institutional knowledge” to make decisions when her father decides to set aside.

“No one has all the experience, expertise and passion in building and growing this company from a smaller regional company to this amazing growth company that it is today,” McMahon said.

When asked to describe the long-term future of the WWE, McMahon used the company’s motto. “It sums it all up about WWE,” he said. “That is, then, now and forever.”

Disclosure: Peacock is the broadcast service of NBCUniversal, CNBC’s parent company.