DREW: What do you make of the financial state of WWE? The Network’s introduction certainly led to an unstable 2014, so do you see these concerns as indicative of a rocky transition period that will right itself soon or are the effects more long-lasting?

CORY: Similar to our critiques of the company’s creative output, it appears that the Network has only exacerbated WWE’s scattershot business strategies. The Network was a long-gestating idea that was initially thought of (and promoted on TV as) a cable channel, but WWE also partnered with ION TV and the CW to add C-level Main Event and Saturday Morning Slam, let USA talk them into bumping Raw to three hours a week, and put NXT programming behind the Hulu paywall. For a company priming consumers for a one-stop-shop experience, WWE did an amazing job of spreading its content in as many random places as possible.

That’s just in the US. The initial Network offering in Canada outraged consumers, various issues kept the Network out of the UK for longer than expected, and then pre-existing contracts abroad forced Main Event off the Network in the states. To top it all off, WWE has given free monthly access to the Network multiple times over the year, just to reach that 1 million number you noted.

WWE promised to revolutionize its business model, but doesn’t seem to have a coherent strategy to accomplish that. Although the stock price has stabilized since the big drop early in the year, the company’s lingering issues seem to be mounting. Frustration with storylines (from both fans and talent) are piling on top of disappointment with the Network’s lack of original content, and you have to wonder if WWE is simply overextended itself. Growing pains are expected, is this something more? What do you think other networks or companies looking to go the standalone OTT service can learn from WWE?

DREW: We’ve been pretty hard on WWE, so I’ll start with a compliment: they produce a lot of content. Debate its quality all day long, but as you just proved the WWE produces several hours of cable television every week in addition to the programming on the Network (and that’s not counting output for home video and WWE Studios). The Network represents the company’s first big push into distribution, and if it teaches us anything it is that producing content and distributing it require entirely different business acumen that WWE is woefully lacking. In many ways WWE is taking the opposite path of companies like Netflix and Amazon, moving from production into distribution which is proving a much more difficult path than the reverse.

The result is burning bridges with their distribution partnerships. Introducing the Network meant pissing off cable/satellite providers like DirecTV over lost PPV revenue, settling for less on television renegotiation with USA, and cutting into the home video market. New OTT services can learn from this and shore up their existing partnerships in the process of building their own platforms. This won’t be a problem for most networks since they are already part of large media conglomerates (something Vince McMahon resents ever since fighting TimeWarner and WCW). For most OTT services, the Network’s troubles simply won’t be much of an issue due to conglomeration and deeper corporate partnerships.

I sometimes wonder if the WWE Network will become an odd media artifact—bizarrely prescient but ultimately forgotten. What do you see for the WWE Network’s future? What will be its legacy in Internet-delivered television?

CORY: I’ve criticized WWE because I’m a frustrated viewer—but I’m still a viewer. I’ve watched something on the Network at least twice a week for a year. The problem is that we can imagine all the great things WWE could do with the platform that they haven’t done just yet. That utopian vision you mentioned hasn’t been fulfilled. If there are lessons that HBO, Sling, and anyone else can learn from WWE it’s to launch with a real plan and to modulate expectations.

In the future, I suspect that the HBOs of the world get credit for the OTT revolution, not WWE. The Network will never appeal to general consumers in the way a TV network’s service can, and once major sports league full embrace cost-effective OTT distribution, WWE’s early move will be forgotten. It doesn’t even get enough attention now when it’s one of the only games in town. The harder question to answer is how the Network fits into WWE’s future. Do you see improvements coming sooner rather than later?

DREW: For all our negativity, WWE is actually looking pretty good a year-out from the Network’s launch. Subscriber numbers are still under comfortable profitability range but not by much, and their stock performance has rebounded after a disastrous summer. That means WWE will either rest on its laurels and not make improvements or will feel emboldened to double their efforts into Network viability. I’ll hedge my bets by saying I think the Network will improve but not enough for massive success. Ultimately the Network will avoid an XFL disaster (it has already lasted longer) and will be a mainstay for WWE, meaning the company will continue to invest time and money into its development. I still believe the Network was and is a positive move for WWE as long as they can remain viable in live sales and television deals. The Network will never uproot WWE’s core business practices, but it can certainly provide support.

WWE may never be the powerhouse pop culture phenomenon Vince McMahon desperately desires, but his willingness to take risks like the Network has made professional wrestling an exciting laboratory for television development—even if they rarely get the credit.

CORY: With the introduction of Sling TV and CBS’s All-Access and HBO’s solo version of Go on the way, OTT services are likely the future of television. But one of the world’s largest entertainment companies was ahead of this curve: WWE. With the sports entertainment goliath’s WWE Network about to enter its second year of operations, there’s no better time to assess how Vince McMahon’s latest pet project has fared, and to consider how other companies can learn from the Network.

For the uninitiated, the Network gives fans access to WWE’s immense content library, including hundreds of PPV events and old episodes of various TV programs, as well as live streaming of current PPVs, all for $9.99 a month. For long-time wrestling fans like us, the Network often feels like a dream come true and for younger members of WWE’s audience, it’s a great opportunity to learn the history of the business—or at least WWE’s version of it. But this first year hasn’t simply been pure euphoria. Drew, what’s been the most surprising and/or the most disappointing thing about the Network thus far?

DREW: Although original content was a major part of the original announcement of the WWE Network at CES 2014, WWE has since emphasized two major selling points in their marketing: cheaper PPVs and nostalgia programming. WrestleMania 30 may have been the first PPV to appear on the Network that April, but the Network truly seemed revolutionary when it aired its first live wrestling special just three days after launch: NXT Arrival.

Despite being WWE’s developmental brand and producing from a 400-person ‘arena’ at Full Sail University in Orlando, FL, NXT is an exciting, progressive, and I’d argue better wrestling product that has emerged as a compliment and an alternative to the ‘main roster’ shows. NXT has yet to put on a bad special (aired every 2-4 months) and is the most complete program WWE produces. In fact some critics argue NXT has made ‘main brand’ WWE programming look worse in comparison, an unexpected detriment of the Network. NXT and new original shows are rarely pushed as selling points yet seem much more necessary to retain long-term subscribers who may quickly lose interest in or simply exhaust the historical library (like Netflix & Amazon’s pushes for original content).

Looking back at that initial announcement makes me wonder just how much the Network altered WWE’s business practices as well as its current narratives. How has the Network changed your understanding of WWE programming, both creatively and economically?

CORY: It’s funny that you ask that, because a year in, I’m not sure WWE understands exactly how the Network has changed its storytelling. While giving away all the PPVs as part of the monthly subscription is a great deal for fans, WWE now treats its less essential PPVs as less essential. WWE storytelling is built on the foundation of the monthly calendar: three to five weeks of TV that builds to a PPV event, rinse, and repeat. But most PPVs now feel like episodes of Monday Night Raw—itself now stretched to 3 hours a week—in that they’re full of comedy spots, rudderless match-ups, and a lack of forward momentum.

Meanwhile, the ‘new’ elements introduced into WWE’s stories with the Network haven’t paid dividends either. TV and PPV events are now bracketed with Sportscenter-like pre- and post-shows, except for when they’re randomly not. Occasional ‘breaking news’ segments further blur the lines between reality and ‘reality’, but are few and far between, despite the fact that WWE spent millions building a TV studio for such telecasts.

Of course, these creative issues aren’t just symptomatic of the Network’s rise; they stem from WWE’s overextended nature that sees them produce seven hours of TV each week, along with various web shows, and an E! reality show. Unlike Amazon and Netflix, who learned that the best way to succeed today is in a building small but dedicated fan base, the Network further signals that WWE is trying too hard to be something to everyone. Do you have a more positive outlook on the company’s recent creative output?

DREW: Although playing the face to your heel would make better use of our conversation format, I’m afraid I cannot disagree (beyond the aforementioned NXT). Over-exhaustion and ‘broadcasting’ seem to be the primary issues. WWE simply isn’t big enough to produce the variety of original content a network requires, hence the reliance on cheap studio shows and repackaged library content—Countdown, Rivalries, Monday Night Wars. The Network’s original slate is basically the same historical ‘moments’ reframed over and over again. WWE Groundhog Day.

While creative exhaustion is reason for fans to be concerned, it is the economic impact on WWE and its performers that seems more up-in-the-air. WWE introduced the Network with incredibly high goals that were not met, hurting their stock profile as well as their renegotiations with cable channels for Raw and Smackdown. It wasn’t until this past month—after expanding to both Canada and the UK—that WWE was able to hit the precious 1 million subscriber count. That news boosted stocks, but the WWE performers might not be fairing as well. It is unclear how they are being compensated for a loss of PPV bonuses usually paid out based on PPV buys (at the significantly higher rate). Uncertainty over the Network played a role in star CM Punk’s notable departure early last year while talent cuts last summer seemed a direct response to low-subscriber counts and fledgling stock performance.

The conversation continues in Part 2 where Cory & Drew talk about the Network’s future and influence on other OTT services.