SXSW: Why Pay-TV Bundles Will Just Take a New Form as Cord-Cutting Grows

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WWE's streaming network lets subscribers watch all its pay-per-view and regular TV events without a pay-TV bundle.
WWE's streaming network lets subscribers watch all its pay-per-view and regular TV events without a pay-TV bundle. Credit: WWE

The influx of online pay-TV services has been a popular theme at SXSW this year, as growing numbers of consumers without traditional cable or satellite challenge entertainment makers how to deliver their content and still generate revenue.

Since WWE introduced its direct-to-consumer streaming product WWE Network in 2014 at $9.99 per month, it has grown to the company's second largest revenue stream, said Michelle Wilson, chief revenue officer and marketing officer at WWE, during a panel Saturday on the future of so-called over-the-top TV.

While initially there was concern that an OTT product would cannibalize WWE viewing on TV, Ms. Wilson said that hasn't come true. Its streaming platform and TV products each serve distinct purposes for fans, she said.

But the value of a streaming product compared with traditional pay-TV carriage varies by the programmer. At Riot Games, which is currently working with MLB Advanced Media on a consumer product for League of Legends, TV is a good way to aggregate audiences around major events but not the core of what they do, said Jarred Kennedy, co-head of e-sports at Riot Games. It's got relatively big simultaneous reach and opportunity to sell advertising that goes with that, but it doesn't have the same deep, interactive capabilities that come with digital, he said.

For WWE, TV is still at the core, Ms. Wilson said.

When it comes to advertising on OTT, Kenny Gersh, exec VP-business, MLB Advanced Media, said there is more of a tolerance for commercials in free products than in paid tiers. The upcoming League of Legends product will be ad-supported but free to consumers.

WWE Network has taken more of a branded-content approach to advertising by using its writers and content teams to make content that is more humorous and consistent with the environment, Ms. Wilson said.

But for all the talk about how younger consumers don't want to pay for a package of channels, the bundle isn't likely to break down altogether. In fact, bundling may become even more relevant as consumers look for one-stop interfaces for all of their individual OTT subscriptions.

MLB Advanced Media is working with ESPN for a "multi-sport" subscription product that would include a variety of sports content. That would mean consumers might not necessarily need different OTT subscription services for each sport or league.

"There will be aggregators of those products," Ms. Wilson said, predicting there could be bundles of so-called over-the-top networks that serve specific audiences, like auto enthusiasts. "At some point, I don't think people are going to buy all of these individual OTT services."

In looking toward what's next, all three companies are exploring virtual reality and augmented reality opportunities, albeit cautiously.

For the MLB, VR and AR could transform how people watch baseball both from their living rooms and at the ballpark, Mr. Gersh said. But he cautioned that the devices are still heavy and clunky and before anything can truly happen they need to become lighter and easier to wear.

And while WWE fans would likely love to feel like they are in the middle of the ring with John Cena, Ms. Wilson said there are still plenty of questions that need to be answered before we will see such experiences.

"Is this just another 3D?" she said. "Does it take away from the social aspect of our content?"

"We don't want to do anything too early because if it doesn't actually improve the experience it is not worth throwing it out to fans at this stage," Riot's Mr. Kennedy said.

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