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As of this writing, the WWE stock is down another dollar plus per share, this after losing over 15 dollars per on Thursday and Friday last week. For those of you that missed it, the company reported their first quarter earnings on Thursday and there was a massive sell off of over $13 per share. Many times when a stock sees a drop that drastic, by the end of the trading session buyers looking for a bargain swoop in and grab shares at what they see as a discounted price.
That did not happen on Thursday. Or on Friday, when they lost another two dollars a share. Or today.
The message is pretty clear to me, most of Wall Street thinks that the stock was overvalued as it was nearing 100 dollars but more importantly, after looking at the first quarter numbers, they are not seeing an avenue where WWE will find growth going forward beyond the revenue from the new television deals that start in October, and that value is what drove the stock to the price it hit last week.
Instead, the market has looked at the first quarter release and instead of seeing positives in the future of WWE, they see regression. Wall Street is always looking for how you will grow your company and right now they don’t see that in WWE. Now, let me be clear when I say that for the next five plus years, the life of those TV deals, the company will be more than fine. They will be flush. But what the market sees is that beyond the revenue generated from the TV deals, the rest of WWE’s business is soft (including their house show business, which Vince McMahon said he had a fix for last year and clearly did not).
Ironically, in the old days WWE needed the TV to be strong in order to make their real money at the house shows, PPVs and through merchandise sales and agreements. In essence, they were only as good as what they were delivering on TV as it was the impetus that got people to go into their wallets and spend money on their product.
Obviously, things have changed. The sad part is, it doesn’t have to be that way. But, it is.
The reason that the other indicators were down for WWE in the first quarter is the same reason that over 20 percent of the audience tuned out from hour one to hour three of Raw last week. Despite what Vince McMahon said on the earnings call last week, the problem is in the company’s creative process and everyone (except maybe him) knows that. It’s clear as the nose on his face. When you start your show saying that by the end of the evening we will determine the first challenger to the new champion’s Title, and 20 percent of the people don’t bother to stay around to see who that will be, it’s pretty clear that you have made it easy for them to not care. When you tell stockholders that you had over 400,000 people sign up for your Network the week of WrestleMania and you expect 300,000 of them to be gone by the end of the quarter (and that may be low on WWE’s part), it’s because you are making it easy for them to not stay around.
What is the thing that makes people want to stay around? Stories and characters that they can invest in, a.k.a. the creative process.
Last night, HBO aired the third installment of the final six episodes of Game Of Thrones. It may well have been the best single TV broadcast that I have ever seen in my life. It was an 80 minute show that seemed to go by in 80 seconds. Why?
The stories and the characters. The attention to detail in the writing. The investment that I have in the characters, along with the growth I have seen in them as the seasons have gone by
For example, in the very first episode there was a scene between Brandon Stark and Jaime Lanaster. It was an intense scene that was the genesis of Bran’s storyline. At the time, it didn’t seem all that important to Jaime, it was more of a “that’s what that guy does” kind of a thing.
But in reality? It was a huge moment for both of them. In the first episode of this, its 8th and final season, where things will be escalating to a ridiculous (in a good way) level, they ended the show with those two crossing paths for the first time since the very first installment of the show. I won’t give any spoilers here, but it was an epic moment. It was a scene that was able to occur because the writers had a vision, they stayed true to the vision and they told a story that would add to both men’s character along the way and culminated when they finally came face to face, as much different people than they were when they last met. If you watched them in the first season and compared them to what they are today, they were so different. They grew, and we got to watch them do it.
In WWE’s case, they get those returning fans every year and then lose them after WrestleMania. Why? Because when those fans come back to WWE, nothing has changed. The creative is still disjointed. Things happen that make no logical sense and/or are never explained. For example, say you came back for the epic Ronda Rousey match and you see a finish where she is clearly not pinned. You tune into TV the next night and what do you see about the miscarriage of justice? Nothing, not a damn thing. You know you saw a bad finish the night before and they can’t even be bothered to address it or explain why it will stand. So you say, “Maybe they will do it next week.” You tune in and you see that there is a Superstar Shakeup. OK. How are they being shaken up since neither brand has a GM anymore? Well, we don’t know because they didn’t tell us, nor will they tell us why people that changed brands are suddenly back on their old brand.
On Game Of Thrones, they explain everything. In WWE, they explain almost nothing. They forge a path in season one and stay true to it along the way, knowing where they will be going down the road. That’s reason number one why people are losing interest in supporting WWE’s product. When things don’t make sense on TV, why go to house shows? People go to house shows because they are so jazzed from what they saw on TV. In WWE’s case, people don’t even watch the whole TV show to the end. There is clearly no long term planning, and that hurts the product. If you miss a month of TV, you don’t really miss anything.
The other example GOT can set for WWE is in the characters. Every single main character has evolved and shown growth on the show. The Hound is a guy who never cared about anyone until Arya Stark came into his life. Arya was a little girl when she witnessed a heinous event and spent the next six seasons growing and becoming the character she is today. Jon Snow started way down here and ascended to way up here. Even smaller things, like the relationship between Jaime and Brienne of Tarth showed ten times the creative that any WWE main storyline ever has. A big part of why we see the growth that we do in GOT characters is that they come across as real. We get to see them as people, even though every line for them is written by the show’s creative team.
What growth do we see in WWE wrestlers? Zero. Tune in last year to this year, they are all the same. The only difference is are they a heel or a face. They are still reading the same generic, boring lines that are written for them by creative and it keeps them from breaking out and becoming someone a fan can really get into (and then buy merchandise for and PPVs to watch). Everyone in WWE is interchangable. On GOT no two characters are remotely close to being the same. In WWE, very few characters are remotely different. That is not the fault of the talent, that is the fault of Vince McMahon and his creative process.
Now I will fully admit that Game of Thrones and WWE are fundamentally different. One is an epic, somewhat limited episode TV series and the other is a wrestling show that produces weekly broadcasts. They also are going for a different audience. But the one area where they are exactly the same is in the fact that they are an entertainment broadcast looking to satiate their audience. And the one are where their audiences are the same is that they wants a cohesive, interesting show to watch. Clearly, WWE is not doing that right now, as evidence by the drop in the stock price and the company’s indicators. It has nothing to do with injured stars, despite Vince McMahon’s claims. It has everything to do with his booking.
For now, it’s not an issue for WWE thanks to the TV deals they have in place. But down the road? If they don’t take a page from GOT’s book and tighten up the creative process? Well, then Winter may very well be coming for WWE.
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