As For Dynamite: A Few Words about the Business Model

I’ve seen so much shit on the Internet about AEW of late that I finally realized that an entire industry exists just to shit on this one new promotion.  It’s actually kind of amazing.

We'll talk about Shaq in a minute.

Jim Cornette’s YouTube show provides the Ur example. Cornette’s channel typically does somewhere between 25K and 45K viewers with occasional spikes to around 99K and a recent mega-spike of 185K when he discussed Paul Wight’s signing with AEW.  What’s for sure is that his actual ratings are about anything but him.  He’s spiking when there’s interest in the topic.  His personal pull appears to be 25K.  Which is great in a sense, but I’m not sure it would pay Cornette’s mortgage all on its own.  At best, it’s subsistence farming off the greater pro-wrestling landscape.

Compare this to AEW Dark, a relentlessly predictable show that everyone shits on all the time.  To be clear, they film this show at something like 2 am with literally whoever happens to be standing around after Dynamite.  It’s the equivalent of your standard spring college football game -- i.e. it's important to the people on the field trying to make an impression, but it doesn't matter a lot to the overall season as a whole -- but it’s a weekly on YouTube.  

Folks, this week’s Dark was released last night at 7 pm.  As of this writing, it’s already done 236K viewers.  Which is A LOT.  But we can get a more complete picture of the show’s reach by looking at this past Saturday’s pre-PPV edition.  As of this writing, Saturday’s Dark special has already hit a whopping 391K viewers.  Considering that AEW’s flagship show on TNT is only pulling about 850K viewers on actual cable, that ain’t bad -- at all.  Admittedly, I’d be curious to see what the ratings look like when we add in the cable-cutters and international streamers, but 391K viewers in less than a week is actually amazing for what’s on offer here.  They probably wouldn’t even be doing the show this way if they could just tape their wrestlers working occasional indy shows outside the confines of the pandemic.

With all of that in mind, though, we can see why one of the biggest issues with starting this column was the sheer volume of noise that already exists in the overall space.  Writing about pro-wrestling reminds me a bit of writing about triathlon.  Lots of folks like it, but seemingly all of them also want to write about the experience of it.  

That’s not ideal.  But what can you do?

AEW’s Business Model

Okay, I’m not Tony Khan, obviously.  However, I’ve got an MBA, and I’ve now been a part of two start-ups. That doesn’t necessarily make me an expert, but it does give me a little insight into what I think we’re seeing as far as AEW’s production is concerned.

Let’s start with the obvious.  When you start a company like AEW, you’re looking at a certain investment period before you expect to turn a profit.  What’s interesting about this is that AEW became profitable way ahead of expectations.  They scored an initial distribution deal with TNT that got them off the ground and then signed an extension that ensured their financial stability for years -- even decades -- to come.  Bottom line, they became profitable a long, long time before they absolutely had to.

So now AEW is making money.  But really, they don’t need money, at least not right this minute.  What they need is exposure.  They need to grow the audience.  They can do something like subsistence farming right now, but who cares about subsistence farming?  

Tony Kahn is already a billionaire.  He’s here to take over the world.

That takes a much longer-term plan.

So.  The company has barrels of cash, which they would happily set on fire in gigantic piles if it meant doubling their audience overnight.  Alas, that’s not super-productive.  

What’s productive is doing anything and everything to increase their exposure.

I don’t know if you’ve noticed, but this is exactly what we’ve seen over the course of the last month or so.  They’ve brought in Sting, Paul Wight, Christian Cage, and even Shaq (!) to try to get eyeballs on their product ahead of their most recent pay-per-view (PPV).  They also held an exploding barbed-wire deathmatch!  All of this generated tons and tons of mainstream media attention, leading to their biggest PPV buy in history.  In thinking about that, friends, remember -- this company does not even make a significant portion of its revenue from PPVs!*

People have been crying about all the “old wrestler” signings of late, but those signings have generated a ton of press.  If they paid Paul Wight $1M per minute for what he’s already done and then never used him again, he’d still be an outstanding hire given where this company is right now.  Hell, as we already noted, Wight’s signing helped Jim Cornette 6x his audience in one day. 

How much more did Wight help AEW?  

Understand: they do not need the money.  They need the eyeballs, and Wight’s ten minutes or so have brought a ton of eyeballs.  The dude is majorly famous.

Ratings and especially ratings in specific demographics are great, but what AEW really needs right now is mainstream media attention and buzz around their current creative content.  They need the perception that their product has a built-in audience.  Because WWE just signed a billion-dollar deal to put their content on Peacock+ -- which is probably going to be a net negative in terms of viewership over the short-term, but for that money, who cares? -- and if AEW can also sign a deal like that with HBO Max, then Tony Khan and company will have really paid off their initial investment in a way that actually matters, even given Khan’s extant personal fortune.

You guys think this is a weekly ratings war between WWE and AEW, which is actually kind of funny.  Khan and Chris Jericho fan the flames because it keeps people talking about their product, but no one gives two shits about it in either locker room, which is what Khan and Cody Rhodes have told you a million times already.  Hear those words because that is literal truth.  

The real war is over the value of streaming rights in an age of endless media fragmentation.  Or, to put it another way, NBC/Universal (Peacock+) and Warner Media (HBO Max) need to find a way to survive the end of broadcast television and cable.  In that kind of world, live sports and sports entertainment are big gets, especially when ESPN/Disney already has almost everything else locked up on ESPN+, and whatever’s leftover has gone to the CBS Sports Network.  

Everything we’re seeing now, at least from AEW, is all about trying to increase the product’s exposure ahead of their next big rights negotiation.  Khan is lucky that WWE has already set the bar pretty damned high for the value of pro-wrestling overall.  At the same time, though, WWE is trying desperately to maintain the illusion that it’s the “only” pro-wrestling that matters, hence the value of its rights being so much higher than everybody else’s.  It’s telling, however, that even New Japan Pro-Wrestling (NJPW) now has a streaming deal with the Roku Channel.  It seems kind of inevitable that when AEW goes to HBO Max for their own inevitable streaming deal, they’ll also try to package in content from Impact and maybe even AAA and/or NJPW if they can swing it.  I mean, we all see that, right?  The counter-moves are playing out right in front of us.  AEW is using the smaller promotions even now to attack this idea that WWE is the “only” place that matters.  AEW needs everything to matter.

Anyway.  AEW is very much in the phase of, “throw everything at the wall and see what sticks.”  Or, as they themselves say, “We have a little something for everyone.”  As long as 400K people keep watching AEW Dark, I’d say they’re in decent shape.  I’m honestly curious to see what they have in mind for Dark: Elevation.

*As opposed to the talent, who earn PPV buy bonuses.  That makes the PPV a huge deal for the wrestlers, especially when they also issue a tie-in t-shirt.  Kenny Omega did that just this past week for the exploding barbed wire deathmatch.  That shirt is badass, too.