Barrios offered the latest comments on a proposed Network during a presentation at the UBS Global Media and Communications Conference on Tuesday, December 10.
Barrios noted the pros and cons of distributing via the Internet - or "over-the-top" models - such as Netflix. One specific con is that WWE would incur all costs, as opposed to sharing costs if they distributed the Network through a traditional cable/satellite provider.
Barrios flashed back to last year's conference when he noted the technology was not ready to handle Network distribution via over-the-top, but that has changed since late 2012.
"I was here 12 months ago and people were asking me then and I said we just don't see the data to say that it’s there yet, now we see the data there. It doesn’t mean we are going that way, but it is now a viable option," Barrios said, dousing water on the idea that the Network is absolutely set for Internet distribution only, but saying it is more likely.
"One of the things that happened over the last 12 months has been happening for quite a while and we have been monitoring it for quite a while, is the consumption of long form video over-the-top and we all have Netflix to thank for this," Barrios said.
"They have done the spade work of creating the environment and the consumption habit of consumers to watch long form video over-the-top. So this, earlier this year we said where two years ago we didn't think there was enough of that happening to make a network viable over-the-top, we now believe it is viable over-the-top."
However, Barrios said WWE is still seeking a distribution deal through traditional providers.
"We continue to work with the MVPDs, see if we can knockout a deal in traditional distribution. If not, we have that option," Barrios said. "We could do it at our own discretion. In either case the economics are differen... If you went down each line item they differ between traditional and over-the-top distribution. Pricing is different, splits are different, costs are different."
Barrios added later: "If you go over-the-top you have significantly more costs, you have to do things like CDN costs, credit card fees, customer service. If you go traditional that essentially is covered up in the split that you are paying the MVPDs."
The bottom line for either model - or a combination of both - is WWE needs one million subscribers at $10-15 per month to break even. 2-4 million subscribers would then begin to double and triple WWE's revenue potential, even as WWE "cannibalizes" PPV business.
- Barrios talked in-depth about the effect on PPV business. He suggested WWE would continue to offer PPVs through traditional distribution, as well as through the Network for monthly subscribers, and they would hope the traditional distribution would eventually go away as the Network absorbs PPV business.
"Obviously a really successful network means the pay-per-view business slowly goes away and that number I gave you on the network, the incremental includes that cannibalization," Barrios told the audience.
Barrios also noted on the PPV business that WWE recognizes a $45-65 PPV event is "pretty expensive in today's world where this is so much content out there," which is why WWE wants to bundle the PPV events with the tape library and original content offered through the Network to make "everything our fans is clamoring for all in one place."
The bundle idea has not gone over well with traditional cable/satellite distributors, though.
"We’ve been working at this for a while. We’ve been working with the MVPDs, the same pitch I just gave you here, let's transform the pay-per-view business together, grow the business for both of us. Quite frankly it's been a bit of a slog, having those discussions but we continue to have them," Barrios said.
