One of WWE’s top executives defended the company against questions about its popularity last week, Tuesday, February 26 at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco.

In a “fireside chat” available for replay on WWE’s corporate website, Co-President George Barrios talked business with Ben Swinburne, Head of Media Research for Morgan Stanley.

In addition to other subjects, they spent some of their time discussing WWE’s popularity, a subject I researched last month for Fightful. I concluded that despite WWE’s financial success, most publicly-viewable metrics that can be measured to gauge popularity of WWE products suggest a moderate decline in interest.

Let’s unpack the exchange between Barrios and Swinburne on the subject of popularity, which begins around the 3:30 mark of the webcast. Audio is also provided in the YouTube video above.

SWINBURNE: Investors often ask me, how do I sort of keep track or assess the level of popularity of [WWE] content? Is it growing? Is it shrinking? And I usually just say well, ‘Fox and NBC almost quadrupled what they're paying you [for TV rights for Smackdown and Raw, respectively],’ so that sort of speaks for itself. But when you look at the ratings, generally on TV you guys have had some ratings pressure, [when] you look at the attendance trends which you spent some time on on the earning call [on February 7], [you] called it a little soft, [also] consumer products. So there’s certainly some questions in the marketplace about that data and sort of reconciling that with this incredible tailwind on the media side. How do you guys answer that question around measuring and assessing the core popularity and health of the IP?

Swinburne is addressing the counterintuitive circumstances WWE finds itself in today as a business. Because it’s live DVR-proof content that ranks well among other programming, value of TV rights for Raw and Smackdown are exploding, largely driving the company’s financial success. WWE breaks its own finance records year after year, with no end in sight. Yet measures of fan interest; such as TV viewership, event attendance and merchandise sales; are stagnant or declining.

Fox recently bought the U.S. TV rights to air Smackdown. NBCUniversal (parent company of the USA Network) renewed rights to Raw. Combined, each five-year deal (going into effect at the end of 2019) represents a 3.6x increase in average annual value of U.S. TV rights for WWE. Within the next few months, new TV deals in the company’s next two biggest markets, the United Kingdom and India, will likely be finalized at an increase.

And while it’s questionable whether the choices around the timing and strategy of launching the WWE Network in 2014 was most optimal, the subscription video service is turning a profit similar to what pay-per-view once delivered (even if the Network probably isn’t so profitable yet that it’s made back the opportunity cost and investment the service’s launch required).

How then do we explain data like these, evident from WWE’s own reporting?

The company Swinburne works for has a stake in WWE. As of March 31, 2018, Morgan Stanley holds 425,662 shares of WWE, according to WWE’s corporate site, about half of 1% of percent of the company, worth about $35 million. While Swinburne’s question is a challenging one, and one he could’ve easily shied away from, I think he’s being charitable to Barrios when he suggests the big new TV deals, albeit financially impressive, “speak for themselves” positively regarding popularity.

Unexamined in Swinburne’s question is whether the dichotomy between TV rights increases and popularity decline represents any vulnerability. While WWE is by far the leader in the wrestling industry, is there a possibility that the increased demand for live TV content like WWE’s might result in another well-funded player in the wrestling industry attracting its own lucrative TV rights contract, and competing long-term with WWE for talent, if not for a share of other valued metrics? AEW’s ability to attract the Young Bucks and Kenny Omega away from joining WWE, as well as several WWE wrestlers recently reported to have requested their releases from the company, suggests the competition for talent is already underway.

And if star power is a key factor in the decline (as Barrios’ response pointing to injuries seems to entail), what’s the company’s vision for star creation and elevation? Has the company evaluated its creative vision in recent years? Could the decline in attendance and viewership be at all related to the often-criticized creative direction of WWE’s main roster programming (led for decades by CEO Vince McMahon) and the creative team’s ability (or the lack of it) to create difference-making stars, maximize goodwill with its audience, and tell engaging stories that compel more consumers to tune-in and to buy tickets and merchandise? Or can such criticisms still be dismissed, as McMahon once dismissed them in a 2015 earning call, as “a vocal minority” whose noise doesn’t reflect any present or incoming economic reality?

These are subjects Barrios -- in his straightforward, nuts-and-bolts, media-and-business, content-and-distribution descriptions of the company -- hasn’t contended with and which those with access to ask WWE executives these pertinent questions in public seem insufficiently informed, or unwilling, to inquire about.

Everything is reducible to time

BARRIOS: I would say the most important metric for us is time spent. And in some cases it's fairly easy for us to measure time spent. You know we have pretty good visibility, obviously, to our SVOD service [the WWE Network]. We have pretty good visibility to the digital platforms [YouTube and Facebook]. On the traditional pay TV platforms, you know, depending what country you're talking about, [some] measurement systems are better than others, but we aggregate all that, and that number is important to us, the scale of the number as well as the trajectory. So it was up in 2018 about 8%, 5.8 billion hours, so that was good.

Barrios’ emphasis on time spent as the ultimate metric that all others may be reduced to is in line with one of the core beliefs of his wrestling-media philosophy: that the money, in the end, will follow the eyeballs.

“There is no difference between time and any of the three dimensions of space,” H.G. Wells wrote in his 1895 novel The Time Machine, “except that our consciousness moves along it.” As long as you have people’s attention, Barrios believes, eventually that attention can be converted into revenue, whether that means putting advertising next to your content; selling subscriptions for access; licensing broadcast rights or other intellectual property rights; or even promoting your products through social media platforms that you don’t derive much money from directly.

It’s unclear whether the 5.8 billion viewing hours in 2018, up 8% from the prior year, Barrios is referring to is only the aggregate number of hours Raw and Smackdown was watched on linear TV around the world, which would be more impressive than if that number includes viewing on all other media platforms, like the WWE Network, YouTube, Facebook and other social or digital platforms. According to WWE reporting about 1.2 billion hours in 2018 were spent worldwide viewing free video online, up 24% from 2017.

An 8% increase in time spent is also consistent with the notion that the fan base is becoming more hardcore while possibly smaller on the whole. There could be fewer or a stagnant number of fans generating an increasing amount of time spent viewing WWE media. Meanwhile metrics that represent unique people, like viewership and attendance, are on the decline.

BARRIOS: I would say if you said to me, ‘Five years from now what's more important: that that number grows or that your scale is big enough that it cuts through the clutter of this fragmenting ecosystem?’ I'd say I want both but I probably take the latter. I want it big enough that it cuts through because in some ways it could be difficult for anyone to grow given the proliferation of ways to spend your time. I think what becomes important as that happens is that you want to be, you know, if there's a barbell effect where there's 10 million content creators generating half the economics, and, over here, the other half [of the economics] are going to 20 or 30 passion brands, like the NFL or the IPL and hopefully WWE, [then] I want to be on [the latter] side of the barbell. So it's important for us to have enough scale to cut through the clutter. Certainly in the U.S. we think we do but ultimately what we look at is time. Generally, you know, there's other metrics that it's hard for us to quantify [as] time, like the attendance, so we just look at live event attendance; we'll look at what our sell-through is at retail; we look at our own direct-to-consumer commerce business [WWEShop]. So we look at all of those. Generally over the long arc of time we feel good. I think the numbers speak from themselves, of how we've done. And like you said, we had two pretty smart partners here in the U.S. [Fox and NBCUniversal] validate that with the economics.

“Cut through the clutter” is Barrios’ latest favorite marketing phrase. He lays out these two alternatives: would you rather have a brand with growing metrics or one with massive scale that's not necessarily growing. He chooses the latter: to be, as he calls it, a passion brand.

In this bit he’s describing the reality of the modern media landscape, where there are millions of entertainment creators evermore niche and suited to specific interests. And more and more of them are economically viable. But the few giants still rise far above the rest and can offer an asset that helps hold the traditional TV bundle together, at least for now, that TV networks and cable/satellite providers may need to survive. And the giants are rewarded with unprecedentedly massive TV rights money in return.

Other metrics being down is cyclical and can be blamed on injuries, Barrios argues

BARRIOS: Having said that, and we think it’s cyclical, Vince touched on it [declining attendance and TV viewership] on the earnings call, in terms of the injuries we had in 2018. That created a little bit of a speed bump for us, and we saw it in various places, which is why we think it is cyclical. So our hope is, you know, as talent recuperate and come back, that will kind of be in the rearview mirror. And people have asked, similarly, ‘Well, when that happens, how long does it usually take [for metrics to recover]?” So we really don't know. You know, it's not like it's happening continuously and you have some model around it. Last time I remember something similar [happening] was [in] 2010. We had several top talent get injured or retire, and you kind of saw some of the same thing. You saw a little bit of softness. You know, six [to] twelve months later, you kind of saw it abate because you had new talent come on or people recuperate and come back to the main roster. So we'll see how that plays out. But generally we tend to agree 2018 was a great year. And it’s our hope: [we’ve had] five years of record revenue through 2018; we think this year we’ll hit right around a billion dollars, and our expectation is that, you know, for the ensuing several years we'll continue to build on that.

Using this line of reasoning to try to explain away a decline in metrics only raises further questions.

Was this year really that much worse than other years?

While Q4 (October to December) may have been especially affected by the absence of Roman Reigns, he worked a full schedule for much of the year.

Dean Ambrose was indeed recovering from injury until August.

Other leading stars like A.J. Styles, Seth Rollins and Braun Strowman wrestled at least one match in each month of 2018, performing in 82, 157 and 142 matches, respectively.

Daniel Bryan actually returned to the ring in April, having his first matches since 2015, and eventually taking a main event role on Smackdown.

The strongest loss in 2018 was the continued phasing out of John Cena, who had the least present year of his WWE career, having only 28 matches, as he embarks on a film career. Cena’s long been the company’s top star, arguably its most recognized personality and a verifiable difference-maker at house shows.

Presumably Cena’s time as a full-time wrestler is done. He last wrestled more than 80 matches in a year in 2015. The following years coincided with a decline in Raw viewership below the rate of TV overall and a decline in house show attendance. What’s WWE’s plan to fill the void Cena leaves? Executives in earnings calls, press releases and conference talks have not addressed this question much. The question raised earlier here about WWE’s ability to create stars and compel audiences is more urgent in light of Cena’s now only occasional appearances at WWE events.

Furthermore if we accept injuries really are a problem that had such wide effects on the business for a full year, what’s WWE doing to curtail those injuries? House show attendance is falling and the Live Events business struggled to make a profit during some quarters in 2018.

Sure, the company may have an excellent medical staff in place to treat injuries once they happen. But maybe running fewer house shows, rather than upwards of 200 per year, would prevent some injuries, and allow wrestlers to be more likely to be appear on WWE TV year-round, thus having some positive effect on viewership, maybe even Network subscriptions and ticket sales. Worker morale might even be raised too if performers had a lighter schedule, had more time to spend at home and recover from the rigors of travel and matches. And maybe even WWE would have one more benefit to offer (a lighter schedule) when trying to attract and retain stars as the company competes for talent with emerging wrestling brands that already run fewer dates per year than WWE.

Brandon has been writing about the wrestling business since 2015. He’s an independent pro wrestler, wrestling trainer, and co-host of the podcast Wrestlenomics Radio. Follow him on Twitter @BrandonThurston.