On Tuesday, WWE announced a profit increase but a revenue decrease from the first quarter of this year as compared to last year.
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Profits are up $13.9 million for Q1 2016 as compared to $9.8 million for Q1 2015 while revenue finished at $171 million for Q1 2016, down from the $176.2 million they did in Q1 2015.
The decrease in revenue year to year can be completely attributed to WrestleMania being in the first quarter last year and second quarter this year. That significantly decreased live event revenue in taking out the WrestleMania gate, as well as merchandise revenue.
Given that, actual 2016 Q2 revenue should be up probably $40 million or more as compared to last year, but WWE indicated that second quarter profits would actually be lower than last year. However, they have projected an increase for 2016 as a whole.
While not factoring in the WWE Network, the first quarter was a break-even proposition based on Wrestlemania. Mania had no impact on the profitability year-to-year, but the event and week itself generated a total of $24.9 million. If you factor that out, the first quarter revenue would have been $151.3 million if you’re doing a fair comparision.
There were not a lot of notes coming from the call, since the key figure, network subscribers, was covered in the call after WrestleMania.
The WWE has greatly changed the way it is reporting data, no longer featuring PPV, home video and web merchandise sales in the key performance indicators, and focusing on social media and global video views, as well as the Network and live attendance.
When asked how WrestleMania did on PPV this year, either George Barrios didn’t understand the question or didn’t answer it because he gave numbers of what the show used to do. The person asking ended up moving to the next question instead of following up.
Questions about tiered network subscriptions or whether Raw or Smackdown would be put on the Network during the same week of airing were vaguely answered, with Barrios and company saying they won’t discuss the nature of TV contracts.
PPV and home video have been greatly declining categories while merchandise has been greatly increasing.
Injuries, Shane & New Stars
Vince McMahon noted that due to injuries, they made chicken salad out of the show, and said that within the next 30 days, many stars will be returning, noting in particular Seth Rollins, John Cena, Randy Orton and Bray Wyatt. They talked about adding 13 new stars to the main roster and credited NXT, although the new stars are a mix of outside wrestlers like A.J. Styles, Karl Anderson and Doc Gallows with people like Baron Corbin, Enzo, Cass, and The Vaudevillains who did come via the NXT pipeline.
McMahon said that the injury rate isn’t any higher than before, and just said that the news gets out more, and most injuries are three to four month injuries. He said that the game isn’t any more risky and talked about being “well ahead of everyone else” when it comes to concussion treatment.
Shane McMahon’s name came up and Vince talked of the great job he’s done as talent, but it was made clear he was working only in a talent capacity.
Barrios talked about long-term strategy such as heavy investments in China that they hope pay off in the long run. He said that while profits were up over last year in the current quarter, a key point was the nature of the video game contract and that more royalties were paid this quarter than at the same time last year. He
noted that would even out, and that the second quarter profit margin would be down from last year. He expects after six months, things would be even. He said they expect growth in profits in quarters three and four.
The company talked OIBDA expectations of $70-$85 million, and indicated more at the high end of that level. Last year’s total was $69 million.
What ended up as a key talking point is that when it comes to social media and videos viewed, 70 to 80 percent comes from overseas, while when it comes to revenues, that number is reversed. They were asked if so much social media and video viewing, metrics they are pushing as the most important, would indicate why overseas isn’t generating revenue like stateside. Laura Martin, who has been a strong company backer, even said she wondered if those statistics are meaningless if they aren’t driving revenue.
Barrios, in short form, talked about it as a long term strategy, noting in particular huge consumption in India but that the network, for example, hasn’t done big numbers there.
They indicated, without actually saying it, that 70 to 75 percent of the free subscribers during the WrestleMania ramp up period have been converted to paid subscribers and that they should average 1.5 million paid during the quarter.