Thursday, April 26, 2012
WWE's current business model criticized
The Motley Fool is featuring an article criticizing WWE's current business model noting that despite the success of Wrestlemania 28, the company's stock price year-to-date is at the lowest levels since 2003.
"World Wrestling Entertainment, Inc. (NYSE:WWE) has been dropping consistently year-to-date. The company has recently reduced its dividend, and its stock price hasn't been this low since 2003. What is happening to the company? It is simple really and it has very little to do with what everyone believes - the lame storylines or John Cena. The past several years, people have been chanting for the Rock to come back along with other legends. Well he is back. So is Brock Lesnar. However, neither can help fix the broken business model that is now endangered in today's world.
In the late 1990s and early 2000s, professional wrestling - although fake to some, produced very real results in pay-per-view buy rates. The stadiums are still sold out, but people are not spending the high prices to watch a three hour show on Sunday nights. One big change that has occurred is the internet. It would be naive to think that internet piracy only affects the music and movie industries. It has definitely affected professional wrestling and the business model that was the bread and butter to its profits for years.
Additionally, mixed martial arts and the UFC have taken market share away from the fans of professional wrestling. UFC has the edge because if people don't want to buy it at home, they can easily find a sports bar around that will show it for free (with the idea being you buy the beer and food at that establishment). I haven't seen a wrestling event shown in public in a long time. This hurts the bottom line of the WWE if you just think for a second of all the sports bars that are within a city and then multiply that around the country."