Post a Comment On: Indeed Wrestling

As we close the books on 2015, we shall return to that central paradox which vexes all wrestlemetricians - can we accurate predict WWE Network subscriptions moving forward?

Let's start, as always, by breaking down the numbers that we know.

There's two important metrics which WWE reports each quarter:
Number of paid WWE Network subscribers as of quarter end Average of paid WWE Network subscribers across over the quarter These two numbers can diverge significantly. For instance, during Q1 2015, WWE had (1) 1.327M subscribers as of March 31 but only averaged (2) 927,000 subscribers from January 1 through March 31. However, the variation between these two numbers was much lower (±5%) during subsequent quarters.

As we look at the historic adoption rates, there's several variables which appear to influence subscriber numbers: How long has it been since the service was available domestically? [2/24/2014] How long has it been since the service was available internationally (outside of UK/Ireland)? [8/12/2014] How long has it been since the service was available in the UK/Ireland? [1/13/2015] When [was]/[will be the next] WrestleMania? Moving forward, it's possible that the new influx of WWE Network launches (India, Japan, Germany) will merit their own "launch" date variable. However, as those launches were scheduled for Q4'2015 and Q1'2016, it's not part of our current data set. Likewise, if WWE ever manages a serious WWE Network in China launch, that would probably deserve a separate variable as well.
So far, we really only have seven datapoints (Q1'2014 through Q3'2015). If we're doing a regression, that's going to limit the maximum number of variables we should include to six or less.
datepaid subscribers domestic international qtr avg paid 9/30/2015 1,233,100 990,200 242,900 1,173,000 6/30/2015 1,156,100 939,300 216,800 1,215,170 3/31/2015 1,327,000 1,131,000 196,000 927,000 12/31/2014 816,000 772,000 44,000 721,000 9/30/2014 731,400 702,900 28,500 723,200 6/30/2014 699,750 699,750 - 665,000 3/31/2014 495,000 495,000 - 147,000
Let's start by isolating the domestic numbers.

datepaid subs dom intl dom % 3/31/2014 495,000 495,000 - 100.0% 5/15/2014 665,000 665,000 - 100.0% 6/30/2014 699,750 699,750 - 100.0% 8/15/2014 723,200 709,110 14,090 98.1% 9/30/2014 731,400 702,900 28,500 96.1% 11/15/2014 721,000 687,514 33,486 95.4% 12/31/2014 816,000 772,000 44,000 94.6% 2/14/2015 927,000 833,548 93,452 89.9% 3/31/2015 1,327,000 1,131,000 196,000 85.2% 5/15/2015 1,215,700 1,011,931 203,769 83.2% 6/30/2015 1,156,100 939,300 216,800 81.2% 8/15/2015 1,173,000 947,485 225,515 80.8% 9/30/2015 1,233,100 990,200 242,900 80.3%
I've filled in the mid-point for each quarter with the "quarterly average paid subscriber" numbers. Also, I've calculated the domestic subscriber number as the mid-point between the domestic percentage from each quarter-end. Domestic is important because it's been a constant since the start. International had huge growth spurts - once when the original global roll-out began (8/12/14) and once when the UK/Ireland came online (January 2015).

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There's two trends at play. There's the general growth throughout the year and the accelerated growth (and decline) around WrestleMania.
There's a general trend of growth outside of WrestleMania: about 20,700 new domestic subscribers each month.
So, we can estimate what WWE Domestic paid subscriptions will be in Q4'2015, Q2'2016, Q3'2016, Q4'2016.
Estimated (using current trendline) 12/31/15: 1,040,500 domestic subscribers 06/30/16: 1,164,500 domestic subscribers 09/30/16: 1,227,000 domestic subscribers 12/31/16: 1,289,500 domestic subscribers Depending on what percentage you assume, you can estimate the international subscriptions too. Q1'15 was 85% domestic. Q2'15 was 81% domestic. Q3'15 was 80% domestic. 
Let's assume that 80% is about the mix -- we'll assume Q4'15 is about 79.5% and Q4'16 will be about 78.7%.  Then, international subscriptions would be:
Estimated (using 20-21% estimated international mix) 12/31/15: 268,500 international subscribers 06/30/16: 307,500 international subscribers 09/30/16: 328,000 international subscribers 12/31/16: 349,000 international subscribers
ESTIMATED

datepaid subscribers domesticinternational   12/31/2016  1,638,500  1,289,500 349,000
9/30/2016  1,555,000  1,227,000 328,000
6/30/2016 1,472,000  1,164,500 307,500
12/31/2015  1,309,000  1,040,500 268,500



The next question is what's going to happen around WrestleMania in Q2'2016?

The growth from 5/15/14 (estimated) from 3/31/14 was about 34%.
The growth from 2/14/15 (estimated) to 3/31/15 was about 35%.

Let's assume that 3/31/2016 is about 35% higher than 2/15/16; that would be about 1,446,500 domestic subs.  International subs would be around 377,500. We'll assume that 5/15/2016 is half-way between the 3/31/16 and 6/30/16 numbers.

That brings us to this estimate:

date  paid subs   dom   intl   dom %  3/31/2014          495,000       495,000                -   100.0% 6/30/2014          699,750       699,750                -   100.0% 9/30/2014          731,400       702,900         28,500 96.1% 12/31/2014          816,000       772,000         44,000 94.6% 3/31/2015       1,327,000    1,131,000       196,000 85.2% 6/30/2015       1,156,100       939,300       216,800 81.2% 9/30/2015       1,233,100       990,200       242,900 80.3% 10/15/2015       1,235,220       988,176       247,044 80.0% 12/31/2015       1,308,898    1,040,574       268,324 79.5% 2/14/2016       1,349,541    1,071,536       278,005 79.4% 3/31/2016       1,824,178    1,446,573       377,605 79.3% 5/15/2016       1,648,356    1,305,498       342,858 79.2% 6/30/2016       1,472,088    1,164,422       307,666 79.1% 8/15/2016       1,513,575    1,195,724       317,851 79.0% 9/30/2016       1,555,167    1,227,026       328,140 78.9% 11/15/2016       1,596,864    1,258,329       338,535 78.8% 12/31/2016       1,638,667    1,289,631       349,036 78.7%
So, based on our current trendlines: 1.31M subs for 12/31/15 (above the 1.233M mark for 9/30/15) and above the 1.2M that WWE had originally said. (Let's assume they have a successful surge in subscriptions from the WWE Network prepaid card subscriptions). 1.57M subs for FY 2016 (compared to 1.256M in FY 2015, +25% growth) The real question is whether it's reasonable to expect domestic WWE Network paid subscriptions to continue to grow despite the ratings stagnation/decline in 2015. Is this service still attracting new subscribers? Or will they increasingly be looking at international markets (Germany, Japan came online in January 2016) for the growth. Is a 35% swell for WM really realistic considering the much larger base in FY16? And will WWE continue to hold those subscribers for the rest of the year? Can WWE really manage 30% growth in such a rebuilding year?
In the past, we saw a lot more stagnation from post-WM to end of the year (10% growth in FY'14 from Q2 to Q4; 11% growth in FY'15 from Q2 to Q4). This model has only about 11% growth for FY'16.
Analysis by Chris Harrington (chris.harrington@gmail.com) - Twitter: @mookieghana