WWE CFO Admits Films Strategy Was 'Poorly Executed,' Talks Brand Perception Issues, More
|By Raj Giri||December 07, 2012 | Comments|
- The films division has morphed in strategy and execution over the last few years. WWE launched its film business in late '05-early '06 and produced six films. The films were produced in localities where they received 20-30% in tax credits. The model was based on using partners to produce, finance and distribute the films. That strategy was "poorly executed," and resulted in a loss for the company.
WWE put Michael Luisi in charge of the division, which Barrios noted was the first time that they had someone with significant commercial experience running it. The new model under Luisi is similar to the old model, where they are still using partners to finance and distribute the films, but with significantly better terms. Barrios said that if the old films were produced under the terms of the new deal, the first six movies would have done 15% better.
- The company is investing a lot in emerging markets. Some are already eight figure markets, like India and Mexico. With India, all current revenue comes from TV licensing. They are not making any money there with consumer products, but "that will come." They have been making a lot from TV licensing deals because the shows do very well.
WWE has now been in China for over six years, reaching 145 million homes. Barrios admitted that growth in China was going slowly, but they have to be careful in that market. They expect double digit growth in both India and China.
- Barrios noted that less than 5% of revenue comes from integrated sales from sponsorships, and that is in part to brand perception issues that have to be worked through. He noted that there was potential for real opportunity in this area.
- While their console games have done well, Barrios said that the company has been "laggard" in gamification of content, social gaming and online gaming, which they plan to change.
- With social media, they are happy with where they're at, but are looking forward to doing more.
- We reported his comments about the WWE Network earlier this week. Not much new on that front, but Barrios admitted that investment in the network has been a drag on earnings in the short run. He said there's too much opportunity in doing the Network to turn back.
The company did a lot of research and found that out of 116 million households in the U.S., about half (57 million households) have some affinity to WWE to where they can be considered a WWE fan. 20% of those fans were described as passionate fans who follow the product, while 40% were casual fans who watch a few shows per year. The remaining 40% were described as lapsed fans who followed the product at some point in time, but not anymore. He said that there was too much to gain to not keep pushing forward, and that the payoff is too large.
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