4 key lessons WWE has learned from its WWE Network one year after launch

WWE is celebrating the first anniversary of its WWE Network, a streaming service that was a big gamble for the company but is starting to pay off.

Within the first 11 months, the company signed up more than 1 million subscribers who are paying $9.99 a month to access WWE's monthly pay-per-views, a library that includes years of episodes of TV shows like "Raw" and "SmackDown," online only franchises like "NXT," and a growing slate of original series.

Getting there wasn't easy. The company was hit by criticism that it would hurt its bottomline with the service, considering it was previously charging around $50 or more for each of its 12 PPVs, including "WrestleMania," through cable and satellite providers. WWE also was one of the first major entertainment players to go directly to its fanbase with an over-the-top offering, the sort ofproduct that the NFL, HBO and CBS has also launched or plan to as a way to appeal to cord-cutters. Disney also has discussed similar plans for ESPN.

One year later, WWE's executives have some takeaways from their network's launch on Feb. 24, 2014 -- lessons that could benefit other players looking to enter the OTT streaming business.

1. Don't be afraid of the long, dark hallway.

In a reference to a line the late David Carr wrote in a New York Times column, WWE notes a playbook didn't exist for its plans to go direct-to-consumer with the WWE Network, but that it didn't need to be afraid to try something new.

"We kept being told how hard it is for incumbents to innovate because they make so much money in their current business models," George Barrios, WWE's chief strategy and financial officer, told Variety. "For any legacy business under the threat of disruption, the challenge is to get from one room with all the profit to another room where so many innovators are setting up shop. For us, what really crystallized (the decision to launch the network) was the courage you need to stick to your convictions and push through. That's what makes people successful: the willingness and ability to navigate the scary hallway."

2. Content distribution is a balancing act.

While the concept of going direct-to-consumer may put more financial control -- and ownership -- into the hands of a content producer, companies still need partners to launch a successful service, while keeping its existing distribution deals in mind, WWE stressed. "Direct-to-consumer is the future but you can't sacrifice your existing deals," said Michelle Wilson, WWE's chief revenue and marketing officer.

"Direct-to-consumer should not come at the expense of other models," Wilson added. "We are very keen on making sure our content that goes (to NBCU's USA Network and Syfy, for example) delivers a certain value. We enjoy our partnership with NBCU. We nurture that partnership very delicately."

The same is true for WWE's existing PPV partners, where there are still fans that want to buy the events, like "WrestleMania," on cable and satellite. "We worked hard to maintain those relationships so (fans) still have the choice to buy on pay-per-view platforms," Wilson said.

The network launched on around a dozen platforms, and is available on Samsung and Sony smart TVs, Microsoft's Xbox videogame consoles, Sony's PlayStation gaming devices, Amazon Fire TV, Apple TV, and Roku boxes. It's now on 13 total.

"We're going to continue to be very aggressive and be wherever people are," Wilson said. But in some countries where the WWE Network has rolled out, WWE didn't have a choice but to remain with traditional platforms. In Canada, the WWE Network is offered via Rogers Communications. In the Middle East, it's available through pay-TV service OSN. "We didn't approach this as OTT is the only model," Wilson said.

WWE also needed to be nimble when it comes to pricing the service.

A six-month commitment for the first subscribers ended up being changed to a per-month structure when fans objected. But in order to sign up even more subscribers, WWE found it needed to get the service in front of more viewers -- and did so by giving away the network for free, during periods when PPVs were being offered.

"Sampling and free is the best marketing tool there is," Wilson said. "It wasn't an easy conversation to have with (WWE chairman Vince McMahon). To tell him we need to give away a pay-per-view took some convincing. But just because we talk about (the network), doesn't mean the fans know what it is. Fans don't necessarily understand what it is or how it works."

3. Direct-to-consumer doesn't mean you go it alone.

While WWE invested heavily in technology to launch the network, it also partnered with Major League Baseball Advanced Media to do much of the heavy lifting.

"You're better off being an integrator than a builder," Barrios said of the move. "Over-the-top has the connotation that you're doing it all on your own, but you need to integrate best of breed partners to help you do what you need to do to support (the distribution) of video all around the world." While some companies are still evaluating that approach, "Our learning is just because you partner, it's still your product and your consumers," Barrios said.

4. Know your audience.

WWE has spent the past year combing over usage data, and has been surprised at how some of its fans use the service. VOD usage has been higher than it expected, for example, with the company having expected most subscribers to want to watch the live streams of its PPVs, considering live sporting events typically attract most sports fans. Live is still king, but two-thirds of usage is for VOD programming, WWE said.

"WWE tends to live in both worlds," Barrios said -- live sports and VOD-friendly TV programming. The company launched with 1,500 hours of video in its library, but now has over 3,000.

Mobile usage also has been high, with 36% of its users accessing the network on tablets and smartphones, something that will dictate future programming being shorter.

"That was an aha moment for us," Wilson said. "A lot of our fans aren't going to watch a three-hour pay-per-view if they're watching on their phones in between their breaks at work. Short form content will play a larger role. I don't think we would have known that going into this."

In the past, WWE couldn't get much data from its cable and satellite providers selling its PPVs. "All of our partnerships in the past have been at arm's length," Wilson said. "Now we have all the data."

That info, like knowing that 90% of its subscribers watch WWE Network programming at least once a week -- and what that video is -- enabled WWE to build teams and infrastructure that informs the decisions the company needs to make to grow the service.

"We're still testing and learning," said Barrios, who doesn't ignore the company's critics. "When you're building transformative initiatives, everything's in the public eye. That's just part of doing it in the public domain. You just don't turn the switch on and have people subscribe. It's a lot of hard work."

So far so good. In addition to signing up 1 million subscribers and expanding the network's reach around the world, the service isn't cannibalizing its flagship shows on USA and Syfy, with ratings for the shows having increased last year. Its YouTube viewership also is up 60%.

Naturally what helped with launching the network was also having the support of WWE's chairman Vince McMahon, who was willing to risk losing millions in order to hopefully recoup that and more with a streaming service it could own entirely. McMahon has made risky bets in the past, including the launch of the XFL football league.

"We needed someone like Vince to say, 'We're going to do this,'" said Wilson.

The WWE Network was originally developed in 2010 as a traditional cable channel, but when new digital platforms provided an opportunity for WWE to launch its own streaming service, in the summer of 2013, "We knew the direction we needed to go was as a direct-to-consumer network," Wilson said.

Up next are plans to develop new original shows.

"We have an aggressive slate when it comes to new original series," Wilson said, and the company is said to be looking at expanding its animation lineup after "Slam City" performed well. Other ideas include talk shows and series from outside partners the way it produces reality show "Total Divas," for E!, with Bunim/Murray Prods.

Much of it "won't be in the ring, but it will appeal to our fanbase," Wilson said.

© 2015 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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The Ticker

Anthem breach
hits at least 8.8M

Health insurer Anthem Inc, which earlier this month reported that it was hit by a massive cyberbreach, said yesterday that at least 8.8 million people were affected.

Anthem, the country's second-largest health insurer, is part of a national network of independently run Blue Cross Blue Shield plans through which BCBS customers can receive medical services when they are in an area where BCBS is operated by a different company.

The number of Massachusetts BCBS customers affected by the breach was not immediately available.

Obama vetoes 
Keystone bill

Defying the Republican-run Congress, President Obama rejected a bill yesterday to approve construction of the Keystone XL oil pipeline, wielding his veto power for only the third time in his presidency.

The move sends the politically charged issue back to Congress, where Republicans haven't shown they can muster the two-thirds majority in both chambers needed to override Obama's veto.

• Coravin Inc., the Burlington-based maker of the Coravin Wine Access System, has announced the appointment of Frederic Levy, left, as the company's chief executive officer. Levy joins Coravin after spending 19 years with Nestle's Nespresso group, most recently as President of Nespresso USA.

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Bay State sued over
 campaign finance law

A conservative Arizona think-tank and two Bay State businesses filed suit yesterday to change a state campaign finance law that allows unions to contribute up to $15,000, but blocks businesses from doing the same.

"I don't have the same voice, the same horse in the race, as my friends in the unions," said Michael Kane, who owns 126 Self Storage in Ashland and is a director of the conservative Massachusetts Fiscal Alliance. "It's really about fairness and equity. We're not asking for anything more."

The Arizona-based Goldwater Institute filed suit in Suffolk Superior Court on behalf of 126 Self Storage and 1A Auto in Pepperell.

"There is no legitimate justification for allowing unions to contribute thousands of dollars to candidates, parties and political committees, while completely banning any contributions from businesses," the lawsuit says. "This lopsided ban on political contributions violates Plaintiffs' rights of equal protection, free speech, and free association protected by the Massachusetts and United States constitutions."

State law allows certain groups that do not have any corporate money, including unions, to donate up to $15,000 to candidates, but corporations are banned from making any campaign contributions.

Jason Tait, a spokesman for the Office of Campaign and Political Finance, declined to comment on pending litigation.

Steven Tolman, president of the Massachusetts AFL-CIO, said businesses already have enough power and influence.

"It's shocking that a right-wing funded group would want to come up in Massachusetts and challenge or try to make an argument that corporations don't have enough political juice," Tolman said. "It's absolutely outrageous."

Massachusetts is one of seven states that allow union donations, but bar business contributions, Goldwater attorney James Manley said.

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Eatery hit by marathon bomb to close doors

Forum, the Boylston Street bar and restaurant at ground zero of the 2013 Boston Marathon bombings, will close March 1 due to a large rent increase, according to owner Boston Nightlife Ventures.

"Unfortunately, the current real estate climate on Boylston Street has motivated Forum's landlord to raise rent this year by nearly three times our current rate," president Euz Azevedo said in a statement yesterday. "This rent increase makes it financially impossible for Boston Nightlife Ventures to operate and sustain a business at a location that means so much to us and to our city."

The second bomb exploded outside of Forum on April 15, 2013, while it was hosting a Joe Andruzzi Foundation fundraiser. The former New England Patriot was on-site and sprang into action along with staff and other party-goers to aid victims injured by the blast.

The restaurant, which suffered significant damage, reopened that August after reconstruction.

"With insurance claims still backed up by bureaucracy, our road to financial recovery was knowingly long," Azevedo said. "Boston Nightlife Ventures would like to offer our sincere gratitude to Forum's incredible staff and to each and every one of our patrons, from our regulars to those who came in after the marathon to show their support. We cried together, we smiled together — none of these times will be forgotten."

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Blizzard of app use in Boston during snowstorms

Snowbound Bostonians turned to their mobile devices to get through the recent run of storms, sending app usage up as much as 30 percent when local colleges canceled classes or the MBTA halted service.

App usage increased between 17 percent and 29 percent during five snow days from Jan. 27 to Feb. 15, according to Localytics, a Boston application marketing and analytics company.

"The biggest thing that surprised me was just how much higher the app usage was," Localytics business analyst Dave Hoch said. "We looked at devices in Boston, which is a pretty big sample, and to see something up 30 percent higher on given days is a very big jump."

Localytics used a 30-day baseline average from Jan. 15 to Feb. 15 to make the comparison and based its analysis on its clients' approximately 28,000 apps.

The highest increases were on days when colleges closed down: 24 percent on Jan. 27, 29 percent on Feb. 2 and 27 percent on Feb. 9.

Not surprisingly, weather was the top app category, seeing increased usage of 46 percent. Retail therapy also apparently helped people cope with the snowiest month on record: Shopping app usage increased 37 percent on the snow days.

"One of the big takeaways to that is just because your brick-and-mortar store is closed, as long as you have a good mobile presence like an app, you don't have to lose all that valuable business," Hoch said.

Photography apps also saw a big bump in use — a 37 percent increase — as Hub residents documented the snowfall and crazy snow antics to share on social media and elsewhere. Books and news apps saw 30 percent and 25 percent increases, respectively, while gaming app usage jumped 23 percent.

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Massachusetts may cut coastal building

Massachusetts is considering limiting development in "high-hazard" coastal areas after decades of vicious, costly storms and predictions of many more in years to come, according to a state commission's draft report.

The report by the Massachusetts Coastal Erosion Commission, created by the Legislature in 2013, says one way to reduce the impact of erosion and flooding on property, infrastructure and natural resources is by siting new development and substantial redevelopment away from such areas.

"The recommendation was to evaluate potential setback approaches," said Bruce K. Carlisle, a commission member and director of the state Office of Coastal Zone Management. "It stopped short of recommending a setback approach."

The report calls for, among other things, adopting the 2015 International Building Codes for structures in floodplains and assessing the impact of rising sea levels during regulatory review of coastal projects.

The report also recommends a voluntary program to buy back high-hazard or storm-damaged properties after cost/benefit analyses.

"This is a provision of the environmental bond bill ... that did pass the state Legislature last July, so that's the authorization, but it has to be appropriated," Carlisle said. "The secretary (of energy and environmental affairs' office) is looking at that provision, but that's really all we can say at this time."

Massachusetts is a state where people have long treasured their beachfront homes, but taxpayers and insurance rate payers have borne the brunt of the high cost of bailing out storm-ravaged homes.

Since 1978, Federal Emergency Management Agency payments for Massachusetts storms with coastal impacts such as flooding and erosion have totaled more than $600 million. Over the past 30 years, the average erosion rates range from 8.70 feet per year in Yarmouth on Cape Cod to 0.99 feet per year in West Tisbury on Martha's Vineyard.

"We as human beings want to live as close to the water as we can, but we have to realize we're not in control of everything," said Paul Schrader, a commission member who has lived in Sandwich for 18 years. "Climate change is causing more violent storms. If we don't take a cautious approach, then we suffer very sad consequences."

After a series of public hearings next month, the commission will issue a final report to the Legislature in the spring or summer, Carlisle said.

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Uber partners with Starwood, giving hotel points for rides

NEW YORK — Uber is partnering with hotel chain Starwood to give riders a bit more incentive to choose the ride-hailing service over a taxi.

Uber passengers can now earn one Starwood rewards point for each dollar they spend on a ride in a car found through the San Francisco-based company's mobile app. Guests spending the night at one of Starwood's 1,200 hotels will earn two to four points per dollar spent, depending on their level of status with Stamford, Connecticut-based Starwood. Points can't be earned until the Uber passenger spends at least one night during the calendar year at a Starwood hotel.

Free hotel nights start at 3,000 points for the lowest tier of hotels, like the Four Points by Sheraton Tucson Airport in Arizona, and can be as high as 35,000 points a night for properties like the St. Regis Princeville Resort in Hawaii.

This is the first global deal where ground transportation passengers can earn hotel points for trips.

This potentially helps Uber in big cities such as New York, San Paulo, Brazil and Bangalore, India where it's going head to head with established taxi companies and car services.

Some airport car services do offer passengers airline miles for their trips, but those programs are open to a number of airlines. This new Uber partnership is exclusive to Starwood. Neither company would disclose the terms of the deal.

The hotel company, known for its Sheraton, Westin and W brands, already has similar partnerships with Delta Air Lines and Emirate Airline.

"Our guests get to us in many different ways," says Mark Vondrasek, Starwood's senior vice president of loyalty and partnership marketing. Through these partnerships, "we're trying to get members to concentrate their stays with us."

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Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.

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Why Bill O'Reilly has a Bill O'Reilly problem

Mother Jones provocatively titled its investigative piece questioning Bill O'Reilly's account of his war reporting during the Falklands War "Bill O'Reilly Has His Own Brian Williams Problem." But in its aftermath, what seems far clearer is that Bill O'Reilly has a Bill O'Reilly problem.

The combative Fox News host has been characteristically aggressive in defending his reputation, feeling he has been unfairly maligned. That included a nine-minute segment on his show Monday, after which he said, ""I want to stop this now. I hope we can stop it. I really do."

At this point, however, nobody is doing more to keep the story alive than O'Reilly, as lashing out at former CBS News colleagues has merely invited more of them to dispute his version of events, just as trying to intimidate a New York Times reporter is stoking further coverage and making him look like someone who is losing control of the situation.

O'Reilly's boss, Fox News CEO Roger Ailes, has always given his prickly star a wide berth when it came to picking media feuds, and this appears to be no exception. Yet as angry as O'Reilly might be over the accusation that he embellished, or the very least mischaracterized, aspects of his war reporting in the 1980s, having now given his response, it's hard to see how the host benefits from pressing onward.

In interviews, O'Reilly has disputed the Mother Jones story and statements by former CBS reporters, such as Eric Engberg. (He labeled Engberg a "coward" for not agreeing to come on his show, yet has selectively spoken to only those outlets he deems worthy.)

By staying in attack mode, however, O'Reilly is inspiring more of his one-time peers to speak up about a situation that, it should be noted, none felt compelled to discuss publicly until now.

Still, therein lies the Bill O'Reilly problem. Because the host tends to filter everything through the language of politically motivated broadsides - with "guttersnipes" and "smear merchants" emerging from the shadows to criticize him - he's reluctant to let any slight pass.

O'Reilly isn't wrong, obviously, when he cites people on the "far left" who seek to disparage him. Where he errs is ascribing criticism from virtually any quarter to such petty, partisan motives.

At the risk of putting him on the couch, O'Reilly gives the impression of still wanting vindication for having left network news and charted his own course, at the newsmagazine "Inside Edition" and for nearly two decades Fox. While one might think the success he has enjoyed would be the sweetest revenge, the host's actions have betrayed a desire for greater respect - including from the old-guard media Fox regularly skewers - which might explain why the studio-based host is still telling war-reporting stories this many years later.

Viewed this way, the fact that many don't feel the Mother Jones allegations rise to the level of Williams' Iraq story doesn't offer much comfort. Because while O'Reilly gave up the goal of objectivity for opinion a long time ago, he has never wanted to be perceived as having sacrificed any of his credibility or stature.

So while O'Reilly has gotten this far by confronting those he feels have wronged him, at this point the strategy is yielding diminishing returns. Simply put, there's a fine line between defiantly choosing to "stand your ground," as he stated Monday, and feeding the media's appetite for a food fight by slinging insults and name-calling, including the Times' report of O'Reilly threatening to "come after" one of its reporters. (Fox News did not respond to a request for comment on his statements to the Times.)

Unlike Williams, O'Reilly doesn't look to be in any jeopardy career-wise, and Fox is adept at circling the wagons when under siege. While that might not silence his critics, having responded to the Mother Jones story, whether or not the available evidence corroborates his recollection of events half a lifetime ago, what's left to say?

Whether Ailes or anyone else can get in O'Reilly's ear when he's on the warpath is difficult to discern. Yet while neither of them is exactly in the target audience for animated Disney movies, to quote a certain ice princess, a friend would tell the Fox host to let it go.

© 2015 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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Lexus tops auto dependability survey

DETROIT — Lexus is the most dependable car brand for the fourth consecutive year in rankings that increasingly hinge on high-tech features.

Buick finished second, followed by Toyota and Cadillac. Honda and Porsche tied to round out the top five spots in the annual survey, released Wednesday by the consulting firm J.D. Power. The survey asked original owners of vehicles from the 2012 model year about problems experienced in the last year.

Lexus owners reported 89 problems per 100 vehicles; the industry average was 147 problems. Fiat was the worst performing brand, with 273 problems per 100 vehicles. Land Rover, Jeep, Mini and Dodge rounded out the bottom five performers.

The top two complaints were technical ones: inability to pair phones to the car and trouble with voice recognition systems, which often misunderstood drivers' commands. That's a change from past years, when design problems like wind noise or mechanical issues like squeaky brakes topped the list.

J.D. Power spokesman John Tews said it's difficult to compare the results to prior years, since J.D. Power changed this year's survey to include more specific questions about technology. But it's clear that high-tech features — and owners' expectations about how they will perform — are increasingly important to overall perceptions of quality.

J.D. Power said 15 percent of respondents avoided a model because it lacked new technology, up from 4 percent in last year's survey.

"Owners clearly want the latest technology in their vehicles, and they don't hesitate to express their disapproval when it doesn't work," said Renee Stephens, vice president of U.S. automotive at J.D. Power.

Wind noise was the third most reported problem on this year's list, followed by hesitating automatic transmissions and excessive road noise.

The rankings are important to automakers, since unhappy customers are more likely to shop other brands when they buy their next vehicle. J.D. Power said 56 percent of owners who reported no problems with their vehicles said they will purchase the same brand next time.

In rankings of individual vehicles, General Motors Co. and Toyota Motor Corp. tied with seven segment winners each. GM's Chevrolet Malibu was the most dependable midsize car, while the Toyota Corolla was the highest ranked small car.

More than 34,000 vehicle owners were surveyed for the study in November and December. J.D. Power has been conducting the dependability study since 1989.

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TJ Maxx, Marshalls to follow Wal-Mart in raising pay

NEW YORK — The owner of T.J. Maxx, Marshalls and Home Goods stores said Wednesday that it will boost pay for its U.S. workers to at least $9 per hour.

The announcement by TJX Cos. comes a week after Wal-Mart Stores Inc. said it would increase wages for its employees and is a sign that more competitors may follow suit. Low-paying retailers are having a harder time retaining workers as the job market improves.

"This pay initiative is an important part of our strategies to continue attracting and retaining the best talent," CEO Carol Meyrowitz said in a statement.

TJX spokeswoman Doreen Thompson declined to say what workers currently earn. A recent Credit Suisse report estimates TJX's current hourly pay at about $8.24. The federal minimum wage is $7.25 per hour.

TJX said hourly workers will start to receive the pay increase in June. In 2016, the company plans to pay all associates who have worked at its stores for more than six months at least $10 per hour.

The company's 191,000 associates around the world restock shelves, greet customers and ring up purchases at the cash register.

Wal-Mart, the world's largest retailer, is raising entry level wages to at least $9 an hour in April and to at least $10 an hour by February of next year. Wal-Mart said the change will affect about 500,000 workers. Also this year, Swedish furniture seller Ikea gave workers at its U.S. division a 17 percent average raise to $10.76 an hour. And clothing chain Gap Inc. raised its minimum hourly wage to $9 last year and to $10 this year.

TJX, based in Framingham, Massachusetts, operates 3,395 stores, including six of its outdoor goods chain Sierra Trading Post. Its shares rose 53 cents to $68.27 in morning trading Wednesday.

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