Peacock's Billion-Dollar Bet On Wrestling

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Friends,

Earlier this week, NBCUniversal’s direct-to-consumer streaming platform Peacock agreed to a deal for exclusive rights to World Wrestling Entertainment (WWE) content.

While the terms of the deal weren’t initially disclosed, the Wall Street Journal reports the agreement is 5-years in length and will cost Peacock more than $1 billion.

Starting March 18th, the WWE will shut down their current streaming network in the United States and move all content, including past events and the popular “Wrestlemania” franchise, to Peacock.

The real winner?

WWE fans.

They’ll essentially get Peacock for free, given both platforms — WWE Network & Peacock — are currently priced at $9.99/month.

Even better, if they can deal with advertisements, it will be $5 cheaper with Peacock’s ad-supported version only costing $4.99 per month.

Outside of the seemingly astronomical price tag, the WWE-Peacock deal interests me for a few reasons.

Let’s start with NBCUniversal’s Peacock.

As a late entry in the streaming wars, Peacock, which launched last July, has gone up against early headwinds with the Olympics being canceled due to COVID-19 — taking their most marketable event off the 2020 calendar completely.

That was a huge loss, both for subscriber signups and also advertising revenue.

They’ve added popular reruns like “The Office” and Kevin Costner’s western drama “Yellowstone,” but when it comes to sports, they’ve barely been able to move the needle — even with an enormous 20,000-plus hour content library.

The solution?

Exclusive WWE content, which will give them an additional 1.2 million subscribers immediately — provided all existing subscribers roll over — but it will also give them a differentiated asset in the ultra-competitive acquisition game of sports streaming content.

For Peacock, that’s a win — regardless of price.

As of this morning, the streaming service has 33 million subscribers, up from 22 million the quarter before, but we have no idea how many are paid, free, or bundled with cable.

That’s a good start, but it still leaves them considerably behind the top four:

1. Netflix

2. Disney Plus

3. Hulu

4. Amazon Prime

In a world that is becoming increasingly competitive on the content acquisition front, Peacock’s deal with the WWE is a no-brainer, especially within sports.

Now, they need to turn that exciting and differentiated asset into subscriber growth, and ultimately, revenue.

As always, execution is key.

As for the WWE, this deal appears to be the first major move by chief revenue officer Nick Khan, who joined WWE last year after leaving his position at Creative Artists Agency (CAA), where he was co-head of television.

It appears the wrestling organization is throwing in the towel on the WWE Network, their in-house DTC streaming platform, which launched in 2014 and currently has 1.2 million subscribers in the U.S. and another 400,000 around the globe.

Sure, they’ll keep the platform open to non-US consumers, but let’s be honest — their growth was stalling.

Here’s what I mean…

Since launching in 2014, WWE Network subscriber totals have occasionally eclipsed 2 million customers, typically around their marquee WrestleMania event. Still, they always taper off in the following months — ultimately settling between 1.5 million to 2 million.

That’s obviously not great.

In the end, this deal seems like a win-win for both parties.

The WWE will license their US-based content to Peacock and be paid handsomely in return — more than $1 billion in total.

Peacock will add exclusive and differentiated content to their offering, hoping to attract additional customers that crave exclusive sports content via streaming.

Only time will tell, but if Peacock can use WWE’s premium content as a cornerstone of their live sports strategy, adding millions of paying subscribers in the process, the $1B+ might seem like a steal five years from now.

We’ll see.

Have a great day, and we’ll talk tomorrow.

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