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03/19/15

Body slammed: Why the streaming service isn't always a winner

Plenty of recent headlines have suggested that cable television and satellite services should be shaking in their proverbial boots with the advent and acceptance of streaming services, suggesting that the tyrannical, monopoly that is cable should soon be coming to an end.
Netflix and Hulu lead the way as the premiere streaming sensations who offer a low cost model and a bevy of programming options to a consumer base that is beyond exhausted with high cable bills and poor customer service. The $10 price tag for Netflix is quite the attractive advertising for an individual or family that is paying $200 per month for cable.
But as much as Netflix and Hulu have taken the entertainment and streaming world by storm (with more on the way like CBS and ESPN which are tinkering with the idea of monthly subscriptions too), the business model isn't full proof.
Yes, ESPN and CBS want to charge customers $20 per month, for example, to have access to their programming, circumventing cable and going, in a sense, rogue for what they're offering. Whether those plans will work remain to be seen, but another entity, the highly successful and marketable World Wrestling Entertainment launched their own streaming service that they're billing as the "WWE Network." For $10 per month, the WWE is offering fans of their sports entertainment product full access to their extensive library of past shows, along with first run programming as well as the ability to watch all of their monthly pay per views as part of the deal.
The network has been in existence for a little over a year with mixed results. Subscriptions aren't where they need to be, and WWE has lost plenty of revenue for their monthly pay per views now that they're on the network for free (WWE is exchanging its $40 per month pay per view price tag in exchange for a $10 per month subscriptions fee in the hopes that volume would win out over fans buying monthly shows consistently).

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Thus far, WWE can't be pleased with the subscription numbers, and that lack of revenue from pay per views hurts the amount of money they can pay their wrestlers, and that sticking point even led to one of their top performers, C.M. Punk, to leave the company. Wrestlers would get a portion of the pay per view buyrate revenue based on their position on the card, but with that money essentially gone, how do the wrestlers make up that income? Punk asked that question with no real answer given.
WWE has its biggest pay per view on the horizon, the March 29th "Wrestlemania," and event that typically drew more than one million buys on pay per view with a price tag of $60. You can do the math and realize just how much WWE is leaving on the table now that "Wrestlemania" is available on the network, that name network that costs customers only $10 without any sort of contract involved when you sign up.
The uncertainty of the streaming network, coupled with money being lost every month on non pay per view revenue, make WWE a perfect example of how streaming is hardly a sure thing. The WWE business model certainly is unique, but one has to wonder if incorporating a streaming service was sound business at work.

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