The WWE Network made up of the bulk of the risk factors that WWE outlined that could harm their business and their income going forward as a company.
“The Company has spent, and plans to continue to spend, substantial amounts to produce content, build infrastructure and market our WWE Network which launched domestically in early 2014 and began to be made available internationally in late 2014,” the opening statement of the WWE Network risk factor states. It’s noted that if for any of a number of reasons they are unable to monetize the Network, there will be additional costs, and the loss of very significant revenue, which will have a material adverse effect on their operating results.
Retaining subscribers is the biggest obstacle so to speak. Churn is every OTT service nightmare and WWE is no different having lost hundreds of thousands of subscribers who do not renew their subscription. WWE mentions that the amount of pirated material contribute to churn however attracting and retaining subscribers to WWE Network will depend in part on their ability to provide consistent high quality content and a high level of service.
WWE mentions that their partnership with MLB Advanced Media is crucial to the WWE Network as they are the ones who supply the the technology and infrastructure necessary to deliver the content. They also mentions platforms provided like Amazon and Apple, who offer their owned or licensed content along with the Network, who might become disincentivized to promote and deliver WWE Network at the same level as provided for their content.
Another risk factor which is out of WWE’s hands in relation to the Network is the disruption of Internet services from subscribers’ end. “Interruptions in these systems, or with the Internet in general whether due to fault by any party or due to weather, natural disasters, terrorist attacks, power loss or other force majeure type events, could make our service unavailable or degraded or could otherwise hinder our ability to deliver content or cause WWE Network to fail completely,” the 10-K filing says. It also mentions that their servers and those of third parties used to distribute WWE Network are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions and could experience directed attacks intended to lead to interruptions and delays in service and operations.
Apart from those mentioned, WWE lists other type of risk factors including International censorship of the product, fraudulent transactions, failed marketing attempts, violation of intellectual property rights, government regulations, and technology enhancements.