WWE expands ancillary in recession

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The economy doesn’t have World Wrestling Entertainment in a hammerlock, but it has definitely squeezed key revenue drivers such as pay-per-view. Right now, the challenge for the global conglom is to continue expanding ancillary businesses as consumers’ purse strings draw tighter.

So far, at least, the company is cautiously optimistic about its ability to generate ancillary income. In a nod to the tough economic climate, WWE cut back on staffing in January and has decided to delay upgrading its media center, yet it’s still forging ahead with expanded DVD, online and magazine offerings.

“Obviously, we are not immune to the economic downturn,” says chief operating officer Donna Goldsmith, “but we’re entertainment, and people are still looking to be entertained.”

WWE posted a 9% gain in homevid coin last year, bucking a major industrywide decline, and it managed this despite financial struggles of its distributor, Genius Products, which is now in the process of being restructured by a new owner. Last year, WWE released 29 DVD titles through Genius, half of which showcased pay-per-view events, while the other half focused on various wrestling talent.

The conglom’s social networking site, which launched last year, commands 326,000 members. Although WWE is weighing various ways to monetize WWEUniverse.com beyond relying on ad coin, including subscriptions, at this point its primary function is keeping devoted fans engaged.

The company also operates a main site, WWE.com, as well as WWEShop.com. Digital coin slowed during the fourth quarter, as it did elsewhere, but WWE ended flat for the year in that sector.

Magazine newsstand sales also felt the pinch late in the year, but Goldsmith is bullish about the company’s plans to up the frequency of its new kids’ glossy, launched last April, to nine issues this year.

“I can’t think of another magazine that in year one made a profit,” says Goldsmith, who until last year oversaw the company’s licensing.

WWE continues to expand internationally, although it recently reduced its presence in Canada, Australia and Brazil to focus on regions such as Mexico, where it has deals with Televisa and TV Azteca. All told, WWE is broadcast in 28 languages in more than 145 countries.

“TV programming and pay-per-view is what sends people to other areas,” Goldsmith says. “If you’re not watching the TV show, you’re not buying action figures.”

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