WWE’s announcement that RAW will be headed to Netflix is one of the biggest wrestling news stories ever. While the announcement only broke earlier this morning, it’s clear the move will have major ramifications, some we can tell immediately, some we can speculate on for the future, and certainly ramifications that we can’t even begin to anticipate.

In short, the deal is a massive success for WWE, TKO and all of its investors. The money figure alone is jaw-dropping, $500 million in average annual value, and the length of the deal, ten years, brings the total to $5 billion.

After SmackDown had a relatively disappointing 1.4x increase in its right fees that were negotiated last year, returning the brand from FOX back to USA Network, RAW getting the kind of earth-shattering deal comes as a major surprise, and shows that pessimism in both WWE and the live-rights fees for sports-based programming trends was badly misplaced.

The deal does come with some interesting caveats. One is that Netflix will become the de facto international distributor for WWE programming in many different parts of the world, simplifying WWE’s business model in a lot of ways as it will no longer individually negotiate with different media partners in different countries. The press release from TKO noted that as soon as the deal kicks in in 2025, Netflix will be the home for RAW in Canada, U.K. and Latin America, and more countries will be added over time. This likely means that as other international deals WWE has expire, the RAW rights will be moved to Netflix in those countries.

This is an interesting strategy, and the main reason the new deal with Netflix can’t really be compared to the old RAW-rights deal which only dealt with the domestic rights. In some markets, like the UK, which saw WWE jump to BT Sports after leaving Sky Sports after 30 years, WWE has seen flat growth in TV rights. Other markets, most notably India, WWE has seen consistent strong growth in recent years in TV revenue. The agreement with Netflix takes some of the risk out of WWE’s business model as it now has locked in revenue coming from international TV deals that is tied directly to the domestic TV deal, but also potentially comes at the cost of limiting the lucrative potential in growing markets like India and the Middle East.

The other interesting caveat is that the deal contains different clauses that almost certainly favor Netflix in the deal. Netflix can get out of the deal after five years, if they find that the WWE investment is not paying off–but they can also extend the deal for an additional ten years, meaning that the current deal of Netflix could run until 2045.

That extension option likely includes escalators if it is picked up by Netflix, but even with those escalators, the concept of potentially getting 2045 TV content at 2024 prices seems like a complete steal for Netflix, as long as the WWE programming works out and is seen as a positive deal for the streamer.

Netflix’s first born child

In addition to the money and security that comes with the Netflix deal, the biggest benefit for WWE is getting to get in bed with Netflix as the first major, live-sports investment that the streaming company has made.

Netflix has long been rumored to be interested in getting live sports rights as an extension of its portfolio, after largely conquering the world of scripted content and is currently building a reality TV empire. While the company narrowly missed out on securing the Formula One rights in the US last year, and has been speculated to be involved in the ongoing NBA rights negotiations, it will be WWE that will presumably be the first major live-rights investment that Netflix will produce.

The prospects of that have to be incredibly tantalizing to everyone associated with WWE, and is arguably more exciting than the financial terms of the deal. Netflix is the tastemaker in modern pop culture–almost nothing can be more valuable for an entity than to get in the top carousel on Netflix and to be recommended for viewers.

RAW viewers will be familiar with the show Suits, a scripted drama on USA Network that ran from 2011 to 2019. The show had its rights acquired by Netflix last year, and has become something of a phenomenon on Netflix after it debuted last fall. Suits supposedly set a Netflix record for an acquired TV series, with 3.14 billion minutes of the legal drama being viewed within its first week. If Netflix can do that for a run-of-the-mill program like Suits, what can it do for one of the most watched weekly programs in all of television, Monday Night RAW?

Since RAW is Netflix’s biggest content investment ever, one can only imagine how hard the streaming service is going to push the content onto its subscribers. It will likely be the most strategic push Netflix has ever made for a single piece of programming. Not only because of the financial investment Netflix has made in WWE, but also to show other major sports leagues that Netflix is serious and capable of being the broadcasting partner for their content. By being first, WWE will benefit hugely by being Netflix’s advertisement to the rest of the television industry that the company is going into this direction.

When WWE first announced SmackDown was going to FOX, there was speculation among stockholders that by going to network television, WWE would be able to reach new viewers and that would get more fans invested in the product, leading to other business increases such as in live event attendance and merchandise sales. While that never really came to fruition, it was enough to boost the stock price for a period of time.

More successful was WWE moving away from the WWE Network model to showing all PLE events on Peacock. With roughly 20x as many subscribers as the WWE Network, events like WrestleMania and the Royal Rumble were watched by far more people than ever before, which in turn potentially lead to an increase in weekly television viewers, live attendance and merchandise sales.

One of the major concerns I had about WWE going forward from a business perspective was the speculation that RAW would be headed to a streaming service, such as Peacock or Amazon Prime. With SmackDown headed off of FOX and back to USA, moving RAW away from its institutional home and on to a streaming service would seem to be a blow to the company’s relevancy and footprint.

Going to Netflix though is a totally different animal. Netflix has nearly as many subscribers as traditional cable in the US, and will almost certainly pass cable by the time the WWE deal starts. Netflix also has a much younger viewing audience and is much easier to gain popularity with the 18-49 demographic than traditional cable or network television. Instead of going to a second-tier streamer, WWE is going with the company that is largely viewed as the future of television, which is a massive win.

Something else I’m curious to see is how the utilization of a live product like RAW will clash with the viewing habits of Netflix customers. A major part of the appeal of Netflix is that viewers can watch the shows on their own time, including binge watching entire series in a few sittings. Will RAW become less of a live, night-of product? Will people instead catch up on RAW after it airs more frequently (also allowing them to fast forward through unappealing parts of the show)?

What does this mean for the product?

This is where the unknowns begin.

For starters, one thing that will almost definitely happen is that RAW will go back to being the “A” show for WWE now that the Netflix deal is in place. When SmackDown moved to FOX, given the bigger reach FOX has over traditional cable, WWE went to great efforts to make the perennial “B” show the new top show in the eyes of the fans. Almost all of the top stars, including Roman Reigns, Brock Lesnar and Ronda Rousey, were moved to SmackDown.

That era is going to come to a close. In fact, with RAW headed to Netflix and SmackDown being downgraded to USA, one could argue the gap between the importance of the two shows has never been greater. RAW will once again be the top show and get a huge proportion of the star power WWE has at its disposal. SmackDown, after a brief period of being the favored child, is headed back to the doldrums.

When RAW debuts on Netflix, expect all hands to be on deck for the company. What that actually means is to be determined. Will this mean WWE will be more aggressive in signing talent, particularly talent away from AEW? It’s hard to say. In a lot of ways, I think that WWE’s idea of star power is more celebrity-based than looking at individual wrestlers who could be strong weekly performers. I’m thinking we will see more of Logan Paul, Bad Bunny, and other celebrities they can get with some name value to help bolster the show at least at first.

In addition to the announcement of the Netflix deal, TKO announced that The Rock would join the board of directors. I’m not sure that really means The Rock will be featured regularly on WWE television going forward, but it does give him a real stake in the company for the first time in a very long time, and it would be reasonable to expect him to make more frequent appearances in the coming years than he has in the past.

Something to monitor may be the maturity of the content of RAW. It’s unclear how WWE’s deal with Netflix will be sold to advertisers, as Netflix is just getting into the advertisement game at the moment. In general, Netflix has never been shy about showing blood, violence and nudity. How that clashes with WWE’s family-friendly approach and whether the changes in advertising structure will lead to more leeway into a TV-14 product remains to be seen.

In my mind, Netflix is huge with kids, and being able to connect with kids in a way that cable television and Peacock does not should be a primary focus for WWE. Can RAW be tailored so that it passes parental content control on Netflix? That might not be exciting for Attitude Era edgelords, but in the long run, the deal with Netflix should help WWE build its next generation of fans, and that starts with appealing to children, and WWE is now on the perfect medium to do that.

What does this mean for AEW? 

With RAW now going to Netflix, what does this mean for WWE’s biggest rival, All Elite Wrestling. From a financial point of view, it’s hard to see much changing in terms of the competitive aspect between the two companies. WWE already had a huge war chest to spend and now the company just has a bigger war chest to spend. WWE was already earning about 12x to 14x more revenue than AEW each year, that gap growing to 20x or whatever the Netflix deal puts them at doesn’t really change all that much.

WWE remains a public company with stockholders to answer to, which in a way keeps costs lows. Even though AEW has less revenue to spend, they can still compete and win bidding wars for talent because the company isn’t beholden to consistent growing profits. I don’t see the move to Netflix shifting that dynamic all that much. Even as WWE got bigger and bigger TV deals over the last decade, the company hasn’t necessarily been gung-ho on passing that revenue back on to talent.

There are plenty of ways to see WWE’s deal with Netflix as a positive for AEW. For starters, it kills any rumors that Warner Brothers Discovery would be interested in acquiring RAW, which could have led to a messy relationship between WBD and AEW.

By Netflix viewing pro wrestling as a worthy investment, and giving RAW a substantial raise to do so, it does send a message to the TV industry that wrestling is a viable place to spend money. While Dynamite, Rampage and Collision are not as popular as WWE’s weekly programming, they are still very competitive, consistent pieces of live programming with a loyal audience. Other media companies may see a lot of value in AEW, especially with WWE now officially off the board.

One thing to monitor is to see if other streaming services that are all chasing Netflix see the RAW investment and begin looking at their own counterpunch. Fortunately for those companies, there is another successful pro wrestling product on cable TV that is currently renegotiating its TV rights, and if one of those competitors wants to get their own wrestling company, AEW would be available.

Historically, WWE has consistently been able to find the new paradigm in media distribution. The company aggressively sold itself to local TV stations in the early 80s, and used cable as a major weapon later in the decade. Vince McMahon used the power of Hulk Hogan to help turn PPV into the signature aspect of the pro wrestling business. Even the WWE Network, in a lot of ways a failure, was an early-adopter of the streaming world that now controls the future of television.

By moving RAW to Netflix, it does feel like WWE is moving to the next frontier. The company is moving RAW from cable for the first time in 31 years, and is now in bed with the industry leader in streaming. Once again, WWE is out to conquer the next landscape and to shape the future of the wrestling industry.

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