TKO Group Holdings Inc (TKO) 2017 Q3 法說會逐字稿

Hello, and welcome to the webcast entitled WWE Third Quarter Earnings. We have just a couple of announcements before we begin. (Operator Instructions) I'll now turn the conference over to Michael Weitz, SVP, Financial Planning and Investor Relations. Please go ahead, Michael.

Thank you, and good morning, everyone. Welcome to WWE's Third Quarter 2017 Earnings Conference Call. Leading today's discussion are Vince McMahon, our Chairman and CEO; George Barrios, our Chief Strategy and Financial Officer; and Michelle Wilson, our Chief Revenue and Marketing Officer. We issued our earnings release earlier this morning and have posted the release, our earnings presentation and other supporting materials on our website, corporate.wwe.com/investors.

Today's discussion will include forward-looking statements. These statements reflect our current views, are based on various assumptions and are subject to risks and uncertainties disclosed in our SEC filings. Actual results may differ materially, and undue reliance should not be placed on them. Additionally, the matters we will discuss today will include non-GAAP financial measures. Reconciliation of non-GAAP to GAAP information is set forth in our earnings release and presentation, which are available on our website. Finally, as a reminder, today's conference call is being recorded, and the replay will be available on our website later today.

At this time, it is my privilege to turn the call over to Vince.

Good morning, everyone. As you probably already have the numbers and revenue increased to 14%. OIBDA is $40 million an all-time high as far as records are concerned when you go back. Network paid subscriptions is consistent with our guidance. As far as new color is concerned, we launched WWE Network in China with our partners PPTV, a successful launch and obviously we are looking forward to a great deal of growth there in the months and years to come.

One other thing we have been doing in a lot of our markets, we have this in OSN and in the Middle East, we have in India and as well as in Mexico, which is pretty much Mexico and Central America. And that's a 2-hour or 90 minutes in language. It is sort of review of what went on in WWE that week, highlights things in their nativity language and that's doing very well for us with these -- this week and pretty much. In addition to that obviously, we're doing a lot of in language live things on our pay-per-view which helps the network and things like that. So we're moving more and more that way we think that's really going to help us in so many different areas. Also another color, we first, we signed our first female talents, I think, from India and where else, Middle East?

Yes, Middle East, 2 of them.

Do you want to tell us those names?

Kavita Devi from India and -- I do not remember, I don't know how to pronounce the one from Jordan. I'm sorry.

All right maybe let me take a guess with that. But anyway, that's created a lot of absurd information here in the United States as well as over there -- and that's one of the ways we're moving, obviously, it is rolling -- which is very successful, the way Paul has put this together, very successful though, the ramp job in terms of our female superstars who are extraordinarily athletic. We -- and speaking of Indian talent, we announced 2 live events going back to India on December 8, 9 in New Delhi. We look forward obviously producing that one.

Some of my favorite topics, obviously, the digital video views and social media, which is crucial to the success long range and short range to our plan here in WWE. In first 9 months, digital video grew 14.2 billion up 23% social media followers. So that's 825 million up 17%, and that gives us overall awareness, obviously streams of revenue as well. But so many different ways we can derive revenue from so many different areas and of course this is one of them.

One of the things curious in terms of our NBCU, we secured 20 new advertisers, which is important to us. We're at about 200 advertisers now. Sudden leverage over the past 3 years and you can see that trend and where that's going and just generally as far as 2018 is concerned, we obviously anticipate continued growth. And another year of record revenue and profits, so that's pretty much where I am.

Thanks, Vince. There are several key topics which we'd like to review today, which include management discussion of our financial performance, progress of key initiatives and our business outlook.

For the third quarter, we generated OIBDA of more than $40 million, based on a 14% increase in revenue from across our businesses. This execution enabled us to deliver an all-time record quarter for reported OIBDA. It also put us on a path to exceed the financial objective that we established at the start of this year. These results reflected the successful execution of our strategy to create compelling original content, engage our global audience and to leverage these strengths to increase the monetization of our content across our 3 core platforms: paid Television, our direct-to-consumer network and our digital and social platforms. Demonstrating the efficacy of this content strategy, our media division, including the network and Television segments, was a predominant source of OIBDA growth during the quarter.

As shown on page 6 of our presentation, Network segment OIBDA increased $8.5 million, primarily due to the growth in Network subscription revenue and as anticipated, more programming expenses from the timing of new original programming release. WWE Network averaged over 1.52 million paid subscribers over the quarter, which was in line with our guidance, representing a 4% increase from the third quarter last year. Importantly, our Network content, including pay-per-views, original series and specials, continue to drive viewer engagement. During the quarter, we added more than 70 hours of original content of the networks featured programming includes SummerSlam, our first women's tournament, the action-packed Mae Young Classic. We also added more than 600 hours of archival content, which now resulted in on-demand library of over 8,900 hours at quarter-end.

As we continue to drive this direct-to-consumer transformation, we also realize increased revenue and profits from our Pay TV platform. OIBDA from the licensing of content of Pay TV providers increased $4.1 million, reflecting higher rights fees and our key distribution agreements.

Our consumer products business also contributed to earnings growth. As shown on page 8, OIBDA generated by our Licensing business increased $2.1 million, driven by higher sales of mobile video games, including WWE SuperCard, our most successful mobile title to date.

In terms of our overall performance, changes in other business segment didn't have a material impact on our consolidated results. Page 9 of the presentation shows selected elements of the capital structure. At the end of the quarter, WWE held approximately $260 million in cash and short-term investment and have approximately $100 million in debt capacity under the company's revolving credit facility. We believe this capital structure enhances our ability to execute our long-term growth strategy. Year-to-date, free cash flow increased approximately $22 million, driven by the improved operating performance I just described and nearly $5 million paid as part of the purchase of a building and real estate property in the prior year period. I'd like to turn the call over to Michelle to provide some additional perspective.

Great. Thanks, George.

Our third quarter reflected meaningful progress on initiatives that enhanced our ability to engage our fans and optimize the value of our content across the platforms, essentially, executing our strategy as George described. Strengthening our ability to deliver localized content, we continue to diversify our talent base. After holding talent trials in Dubai, the participants from the region, as Vince mentioned, we recently hired our first 2 female athletes from the Middle East and India. International talent now represents 40% of the roster at our world-class Performance Center in Orlando.

To increase engagement with our global audience, we launched a localized weekly TV show in Mexico and Central America. WWE Saturday Night produced in Spanish with FoxSports Mexico features highlights from both Raw and SmackDown. The program expands our line up of localized content, building upon our success in the Middle East with our partners, OSN, and in India, with Sony.

Completing our global coverage, we launched WWE Network in China with PPTV, a Suning Media company. The service brings WWE's major Live Events, our original series, documentaries and classic matches to WWE Network subscribers on PPTV's digital platform, which reaches over 400 million homes in the market.

As I mentioned on our earnings call last quarter, the power of our brands to reach a broad global audience on multiple platforms has attracted a record level of sponsors. New deals with blue-chip companies and gaming partners have contributed to a 29% increase in our global sponsorship revenue in the first 9 months of the year. Also demonstrating the increased value of our content, NBCU secured 20 new advertisers for WWE programming in the 2018 up front and has added over 70 advertisers, as Vince mentioned, over the past 3 years. This brings NBCU's roster to nearly 200 advertisers for WWE show.

Our key operating and brand metrics has continued to grow through the past 9 months of the year. Consumption of WWE content increased 23% to 14.2 billion video views across YouTube, Facebook and WWE.com, and we are on a path to reach nearly 20 billion video views by year-end.

Additionally, WWE social media followers increased 70 -- 17% to exceed 825 million.

Regardless of the metrics that you choose, whether it's total attendance, network subscribers or hours of WWE content consumed, they all demonstrate the robust health of our brand. And all of the activities that we described provide proof points on how we are capitalizing on our brand strength, delivering unique content and diverse product to drive long-term growth.

I'll turn the call back over to George to discuss our growth and expectations.

Thanks, Michelle. Looking back over the quarter, our financial and operating results continue to reflect how we're driving innovation and transforming our business model. Looking ahead for the fourth quarter, we project average paid subscribers to WWE Network of 1.47 million, plus or minus 2%. We also estimate fourth quarter 2017 adjusted OIBDA of approximately $31 million to $35 million. This range represents an expected year-over-year increase, primarily due to the continuation of the growth drivers we saw in the third quarter. These include the contractual escalations of TV rights fees, the continued growth of WWE Network subscribers on a year-over-year basis as well as more favorable year-over-year comparison in our fixed cost base.

For the full year 2017, we project average paid subscribers to WWE Network of approximately 1.53 million, representing year-over-year growth of 8%. Based on our expectation of continued strong financial performance, we are raising our guidance for record 2017 adjusted OIBDA to a range of $108 million to $112 million.

Looking further ahead to 2018, we expect to achieve another year of record revenue and a targeted adjusted OIBDA of at least $115 million, which would represent another all-time record. We believe there is significant long-term growth opportunities for WWE. The 2018 target balances OIBDA growth with investments in key strategic areas. In the coming year, our key initiatives include delivering a wide range of content across all platforms; continuing to develop our data and technology infrastructure, thereby, strengthening our ability to engage our global audience; and investing in markets with the greatest long-term potential. We believe these initiatives will enable us to achieve record results and to help maximize long-term shareholder value.

The monetization of content is a fundamental element of our business model. In 2017, we completed new content licensing agreement with Pay TV partners throughout the world, including in countries such as Japan, Australia, South Africa, France and Canada. As you know, certain distribution agreements, representing a significant share of our Television rights revenue will expire in 2019. These include the licensing of our premier programs Raw and SmackDown in the U.S., which expires on September 30, 2019. Whilst in the U.K. and India, which will expire on December 31, 2019.

We currently expect to announce our U.S. distribution plan for Raw and SmackDown sometime between May 2018 and September 2018. We also expect to announce our U.K. distribution plan in the second half of 2018 and our distribution plan for India in the first half of 2019.

Our future plans are subject to negotiations, which are expected to begin next year. While the announcement could occur either before or after the date that I just referenced, we do believe that these ranges represent the most likely period for our communication.

That concludes this portion of the call, and I'll now turn it back to Michael.

Thank you, George. Stephanie, we're ready. Please open the lines for questions.

(Operator Instructions) We'll go first to Brandon Ross of BTIG.

Thanks for the color in the press release about your distribution deals. But just curious, in the U.S., are you currently locked into an exclusive window with NBC, and if so, when are you open to talking to third parties? And then also on TV -- okay, well...

We're not going to talk about those mechanics of the agreement. So we'll -- given the dates we think we'll be public, which will be some time in the middle of next year. And it's a fairly small cohort of potential buyers around the world. We are always talking to both, just to understand their strategy and make sure they understand ours.

And as you talk to those folks, how is your thinking involved in terms of selling all rights to a single player globally versus breaking up the market -- breaking up by market or breaking up between TV and digital. Do you think you are going to want to package your TV and digital rights together or split them up? Any conclusions you have there?

Look, Brandon, I mean, we talk about it the time, we're always balancing, kind of, where content goes, trying to get to 1 of 4 or so key objectives: how do we engage our current fans more? How do we grow the fan base? Direct monetization of the content that we are advertising subscription or licensing it? And then the second order of monetization of giving us a platform to promote all of WWE. So when you look at Pay TV versus digital in different geographies, you got to take that all into account. But I think what you'll see is, us being flexible and tailoring the approach, kind of, market by market as we move forward.

Okay. And then finally, you mentioned your data and technology infrastructure sort of investment for next year. Can you talk about some of your plans for that?

Yes. I mean, we've said it before. We have a significant number of user accounts that have been generated over time through our direct connection to our fans. This include registered users on dot.com. It includes active and inactive subscribers to the network. It includes people who buy tickets online. It includes our e-commerce. So people who are buying consumer products directly from us. We now have millions of user accounts. Around that, we have a lot of data that we are currently integrating. Today, we're able to go pretty deep and into the areas I just described. It might be tailored promotions to people on the network, tailored promotions to ticket buyers. But the vision for us is ultimately for each of our fans to have a complete understanding of how they are consuming our content, really what puts the most smiles on their faces, which lets us kind of do a better job at that and do it at scale and doing it on an automated basis. So we're building towards that. It's an arduous journey. But we have a pretty good head start because of all those millions of accounts that we already have.

And the next is Evan Wingren with KeyBanc Capital Markets.

George, the midpoint of your guidance, I think, this year is $110 million, and you outlined $115 million minimum in 2018. Correct me if I'm wrong, I think, you've got $25 million of contractual increases in TV from your major distributors next year. So I guess the question is, outside of the investments maybe that you outlined, is there any part of the business in your initial outlook that you think could actually decline next year? Or is the delta there purely those potential investments you're looking to make?

Yes. well, as we look forward, probably the only business line where we would generally say is secularly in decline is home entertainment. Doesn't mean that another business can't have a hiccup or hit a speed bump along the way. But if you just said secularly that one looks like it is in secular decline. Otherwise, the guidance for next year is the combination of our internal forecast on revenue, including the Top 7 contract escalation that you mentioned as well as balancing that investment for the future. A lot of the things that Vince talked about, Michelle mentioned, I mentioned in my prepared remarks, we feel really big long-term opportunity. And so we're trying to drive leverage and expansion of OIBDA. But at the same time, making sure we can position ourselves for opportunities in '19, '20, '21 and beyond. So it's a balance of that.

Okay. And then on games specifically, since you called that out as potential area of strength, although modest, do you expect that strength to continue and then maybe are you expecting any incremental contribution from, kind of, this year's version of WWE 2K?

Yes, look we continue to work with Take-Two on the core game. We have a lot of insight into our fans. But we work together with them around the development of the game and the roadmap. And we -- Michelle touched on it before, we spent a lot of energy building out our portfolio of mobile games. We'll continue to add to that in the quarter, wouldn't read too much into it and projecting future performance. But in the quarter, we got a really good performance especially with the SuperCard but we're excited. And we mentioned again before that in the mobile game space is about having a broader portfolio, so we're going to just keep building on that over time.

One more, then I'll hop out. The 20 new advertisers that you've outlined, could you, maybe, give us a bit more color on potential -- on where those are coming from in terms of the verticals? And then the 70 that you've mentioned in total over the past 3 years, is that all additive, or has then been some replacements there? Just trying to gain a little bit of color on how the overall base has changed.

So to take the last part of your question first, those 70 of that we added over the last 3 years have been incremental and additive. So literally, we've gone from 100 and whatever to almost 200 advertisers. So that hasn't been all incremental. And to add a little bit color on the verticals, which again we've made tremendous progress. In the past, WWE programming was relying primarily on theatrical studios coming to WWE and games were really our key categories, and we knew that we needed to diversify beyond that. So the 70 advertisers that we've added, the verticals that we've really focused on and have been successful on were automotive, retail, wireless, packaged goods, pharmaceutical, insurance. So we're starting to add brands like Nationwide, Toyota, Cricket Wireless, brands Pfizer, Kraft. So these are really blue-chip companies and verticals that we were not attracting to -- in the past. So we're very -- feeling very good about the progress we've made on that front.

We'll go next to Daniel Moore of CJS Securities.

Wanted to just follow up there a little bit, obviously, as it relates to the upcoming and pending rates, renegotiations. You're clearly making a lot of strides in new verticals, just as you related, and making tremendous headway in terms of new digital. On the flip side, the NFL, which has been the halo for all sports content is losing ratings. Talk about how much of that is -- is that a concern to you at all just in terms of the overall landscape of paying for live sports entertainment? And a quick follow-up on costs.

Yes. I think one of the things Vince mentioned in his remarks was how important social and digital have been to us on a variety of levels. And we -- 7 or 8 years ago, we heard more of that and kind of the rumors that are in now and talked about how important it was for us to own that platform in terms of engaging our global audience. Similarly, we had discussions around our ability to bring our content direct-to-consumer and monetize directly through either advertising or subscription. So we've done that. And we've created these really powerful platforms. We still believe in the Pay TV platform, where we think bundles will exist. There may be different bundlers, but we think they'll exist. Raw and SmackDown have proven to be pretty powerful tools of engagement that allows our partners to monetize through advertising and subscription. We'll see what the market is like next year. We're having these discussions. We don't know. So nobody likes to see the ratings go down, but relatively speaking, Raw and SmackDown in the U.S., specifically, other markets like India are powerful aggregator of eyeballs. What that means in the marketplace, we'll see.

It was very helpful. And then on the cost side, SG&A down 3% despite a 14% increase in revenue. What were the biggest changes there? And you mentioned bringing your down your fixed cost base. Maybe just talk about what's driving that, either at the network or across the organization?

Yes. And Dan, as you know that corporate and other segment includes both G&A as well as unallocated costs that really are more direct costs to our business line. Things like our talent development, things like our international sales team, our brand marketing across the organization. So it's unallocated direct cost for both of pure G&A. But regardless, as we mentioned in the first part of the year, we knew, because of some timing elements, just how we chose to deploy some of that out back throughout the year that we have favorable comps in the back half of the year. So that's just really what you're seeing, more timing-related elements.

We'll go next to Eric Handler with MKM Partners.

First of all, let's talk about the WWE Network for a second. There's been a lot of discussion over the last, probably, 18 months about more localization efforts, also possible tiering. And understanding that you move at a measured pace, and you want to look at your data, but it does seem like the competition for direct-to-consumer services particularly internationally is increasing monthly. And how do you think about increased competition versus your measured pace of development? And can you talk about some of the things that have happened this year like the WWE U.K., where does that go from here? And how do you think of some of those?

Yes, so the first part, just as a reminder, when you talk about competition in this space, is that -- and you know this, WWE Network is not a general entertainment network competing with other general entertainment networks like a Netflix or HBO. The platform, given our success on the broader platforms, Pay TV and the digital AVOD platform. The network is really for us to super serve our most passionate fans, so it continues to do that. As Vince mentioned early on about our localization efforts, you've seen us localizing more and more over the last couple of years on the content across global platforms. I think, as you said, 2 years from now, what does the network look like? It probably has multiple tiers in it that allows different types of our consumers to experience it. And it probably is in -- at least, in one additional language. I think that's what's coming. But it's less about the competition. It really is it about the timing, back to the element of investing versus driving earnings growth of balancing that. And so that goes into the discussions around timing.

Great. And then...

Just add to the localization on the network. On the pay-per-views, which are Live Events are, obviously, drive a predominant part of our viewership. We are providing those in 8 languages LiveWire, which we just started about a month ago. So that -- our most important content is already provided in multiple languages, and we're getting out ahead of that to market that locally as well as we were kind of testing through that. So we're feeling good about that as a key driver on local viewership.

Great. And just as a follow-up, a quarter go, you signed an international licensing deal to grow your brand. Just curious to see how those efforts are going, and have we seen any deals get signed because of that?

Yes. I think you're referring to our partnership with Lagardère. And again, just signed a deal in the last quarter. So we are out in the marketplace and started the selling process so nothing to report yet. But I will tell you that we've secured a lot of meetings with brands that are based in U.S. but have a global presence. So lot of positive discussions but nothing to report yet.

We'll take our next question from Eric Katz with Wells Fargo.

I wanted to take another swing at your approach to these T.V. licensing deals from maybe a more backward looking perspective. I was hoping you could give some insights to what you learned from the last cycle and how your leverage differs today with the ecosystem evolving so much and so quickly?

Yes. I -- I'm not sure it's so much learning. I think it's just your point that world has changed pretty dramatically. I think there are a lot of changes internally. So the success on social and digital, I think, has -- it might not be too small to describe as transforming the B2B brand of WWE. I think the digital, social and direct-to-consumer has repositioned us in the media industry and among our peers. So I think that's a big change. I think the absolute transformation of the advertising roster on Raw and SmackDown that Michelle talked about that's the manifestation of that. I think our -- the fact that places like ESPN are now covering us as part of their digital and social coverage, I think, that's another example of that internal change. And what's happening externally the proliferation of ways to get content, I think, you could argue -- potentially could make demand for our content even greater, just because, again, we are able to aggregate a lot of live eyeballs. Don't know that for sure. We'll find out when we're in our discussions. But there's just been a dramatic sea change for where WWE is at as well as where the rest of the world is at.

Okay. And so a large share of your social media presence and views -- video views come from overseas. What are the some of the things that you can do differently to really kickstart a transition of those people becoming paid subs? Is there anything you could do besides better content, maybe something kind of marketing side?

Well, I think, it gets to that localization element. I mean, we all know the WWE network today is a U.S. product. Because of the beauty of the Internet, it's available to anyone in the world. So that gets us 27% of our sales from outside the U.S, which is great. I think the growth eventually, especially in some of the larger developing markets, where we have a pretty good fan base whether that's India or Middle East or Latin America, will come through that localization. And back to Eric's question, it's a matter of time and balancing the -- our desire to drive growth as well as invest for the future. But I think the real growth internationally, eventually, will be in more and more localization and across all elements, content, commerce so on.

And I think just to add to that on the technology front. George talked about the infrastructure we're building around data analytics. And I do believe from a marketing perspective, when you think about the -- outside of U.S., the digital and social data that we have added to that is if a fan buys a ticket to a Live Event, we're not directly using all of that data as effectively as we could in terms of driving network subscription. I think the infrastructure that we're building over time will help us do more direct one-to-one marketing. We're just -- we are more customizing our messaging outside of the U.S., but not to the level that, I think, we'll be able to optimize it over time. So I do believe that marketing and the data will help us drive that more effectively moving forward as well.

Okay, last question. Last year, you guys did provide some at least soft guidance as to what subs growth could look like for the following year. We didn't see anything of that for 2018. I'm not sure if there's anything you're willing to update today.

I think last year was pretty consistent to this year, where we just said we expected to keep growing. I think the previous year, we gave a -- some soft guidance. But at this point, like Vince said, we expect record revenues next year. We expect the subs to keep growing next year. And we expect to set a new record in adjusted OIBDA, again next year. So that's all the guidance we're giving.

And the next question comes from Curry Baker of Guggenheim Securities.

You launched the version of the WWE network in China in mid-August. Can you give us any update or indication there of what you're seeing in China on the ground since the launch? And I guess, just more broadly, the level of interest and engagement you're seeing for WWE content in aggregate in China. I know you've done a lot of there over the past years and ultimately what you guys see as the a long term opportunity in China?

So again, it's early days there, as you know and early days for us and early days for SVOD services in China. So really too early to tell. Again, it's definitely a long play in that market. What I will say is the activation in this -- the subscribers that we've have seen come on board in the first couple of months, we've been pleased. Our partners have been pleased. But nothing beyond that I think we'll disclose at this point. But again, a longer play in that market as SVOD continues to grow in the marketplace. As far as engagement, as you know, we have a ground -- a team on the ground there on the digital and social front. We obviously are delivering Raw and SmackDown there live wide in local language. So the engagement levels around that continue to grow at a healthy pace, which we think will ultimately fuel growth of the network over time. But again, it's early days.

We'll go next to Jason Bazinet with Citi.

If I can just go back to the rights fees. If I was in your shoes preparing for those negotiations, right? There'd be the viewership and the number of advertisers and a lot of variables that you would stick in there for what fair value is. But is there another way maybe we could go at it externally in terms of what fair value is by looking at analogues? Because I have sort of difficulty. Your content is so unique sort of thinking globally about analogues. Is there something that you guys have in mind that you would use to benchmark?

Well, we think the ultimate metric is time. That's what everybody is competing for. One of my favorite quotes from Reed Hastings was, "He competes against sleep." Because that's the way to spend your time. And all of us, that's what we're doing. We're competing for time and attention. So we tend to just measure how much time and attention each piece of content that we have gets on a particular platform. And then we see what the market value for that is. We also see what we think we could -- how we could monetize that time directly through advertising or subscriptions. And we just, kind of, compare all 3 and we'll make our decision based on that.

Our next question comes from Laura Martin, Needham.

I was trying to get Vince into the conversation here. Got a couple of programming questions, Vince. So we're spending a lot of money on international, and I guess that local language is a good idea. And I guess that having wrestlers outside U.S. is a good idea. But couldn't we be doing this 15 years ago? Is there something new about the international market that's changed that now -- because I only saw we had big wrestling markets outside the U.S. So is it just that the WWE Network allows us to monetize international investments that we're making them now? Or why weren't we doing this like earlier, Vince?

Well, I think, like everything, Laura, there are moments in time. The one thing that has changed dramatically, if you look back 20 years ago, 15 years ago, if we wanted to get a piece of content in front of someone, there was only one way to do it. You needed to find InVID space and it was limited because it was linear program television, so you had limited inventory and limited partners. Today, we can get a piece of video content into any broadband-enabled home in the world. That done a couple of things. To your point number one, unless it monetizes directly it also changes the competitive dynamics. People now understand that they don't secure the content, it could get there anyway. That has changed a lot. That's number one. Number two, WWE is a different place today, like most companies are after 10 years. It's got infrastructure and resources it didn't have 10 or 15 years ago. It allows us to make investments for the future. It's a lot of what Vince mentioned in his remarks, what Michelle mentioned. So a combination of the world changing and presenting us opportunities and also the company is changing. We've got different muscles that maybe 20 years ago we didn't have, just because 20 years is a lot of evolution, a lot of muscle building happens during that time.

Yes, you're right. He's already answered the question pretty good, didn't he?

I was hoping. So I guess on women, so the NBA paid each of the WNBA teams $10 million dollars because women historically have not really have the viewership or economic model. You're adding a lot of woman to the roster. You just announced, I guess, the first women's tournament. You signed women talent in India it sounds like. Is the comfort you have with the return on capital for the women's part of the business as a woman, is that coming from data you're getting from the WWE Network?

It's coming from data across the board. We see it on the network. We see it on social and digital. And while the data may not be as pure and clean on traditional TV, we see it on the Nielsen data that we have access to. The -- our women performers are getting the same kind of traction as our male performers. So by definition, back to the time metric, and we get the return on investment because time is our economic unit. If we get people to spend time with our content, that's a win, and we're seeing it. So we're going to kind of continue doing that. It gets to what Vince and Michelle talked about talent outside of the U.S. and, we can see it. We can measure it.

Okay. And then 70 hours of new programming in the quarter, which is awesome, because my recollection is when we started the WWE Network, we had 500 hours total. So 78 added in a quarter is quite a big number. Is that taxing to your physical resources? Like the Entertainment Center to be adding all that, like video content, do we need the investment in more infrastructure here, given the pace that we're adding original content?

Yes, I mean, we -- we've been doing about 70 to 80 hours a quarter and, kind of, debuting premiering content on the network since launch. I think the 500 hours is actually a bit more than that you're referring to was the VoD available, which is now up to close to 9,000 hours. So every quarter, we move content, our archival content from our library onto the network. And we'll do about 500 hours or so a quarter of that. And then we debut, whether it's a pay-per-view, NXT, 205 Live, or Camp WWE, we debut about 70 hours or so about a quarter. So that's been fairly consistent for a while. If you said it's taxing our resources, if I said no, I have a lot of angry people at me, the folks doing all that work. But there's no doubt we're creating more content today than we ever have. We'll do about 1,700 hours of content created across digital platforms for the network as well as Raw and SmackDown and it's the different derivative versions of that, in language, 1-hour and 2-hour versions of that. And that's just a significant increase for us. So we've got a great team, a growing team and for us, we think that, that fuels a lot of that long-term growth.

And Orlando can handle all of that? You don't need to expand Orlando to handle all this, new programs.

Well, I -- we've talked about it before. The Performance Center has been a home run based on its original intent, which was to really have greater infrastructure for our development process. Probably, the significant incredible success of the brand of NXT and the talent has probably opened semi, and there's an opportunity to, kind of, keep growing that and coupling that with our international expansion, there is. We're thinking about it. Again, it'll be a matter of time in balancing that earnings versus investment element. But we think there's real opportunities to keep increasing the talent base around the world.

Okay. And then last question for me. I think, I've always had a higher estimate for what you guys could do internationally on subs. Are you guys still like $2 million to $3 million offshore subs? Or do you think with this extra investment you could get that higher over time?

You know what, before launch, similar to when Netflix made their big pivot and, I think, they had put out a number 60 million to 90 million that thought they could get into the U.S. Our analogue was 3 million to 4 million around the world. As we know Netflix 8 or 9 years in is about 2/3 or 70% on the way to that $60 million. Us about 3 years in, we're about halfway to the 3 million. We're going to keep growing the network. Obviously, the faster it grows, the happier we are about as long as it's growing. This is a 10-, 20-year platform for us. And it forms the core more importantly, and this whole direct-to-consumer strategies, what Michelle, mentioned. Our ability to now go direct-to-consumer across all our business, media, product and tickets, we think is strategically really important and the network is a big part of that. So as long as we're growing, we feel good. Some quarters will be better than others. We really don't lose any sleep about that. And we're more focused around the long term.

(Operator Instructions) We'll go next to Mike Hickey with Benchmark Company.

Just a couple of questions. One, I guess, to piggyback on Laura's topic on female wrestling or wrestlers. Pretty shocking, I guess, just in general, how fast women's wrestling is growing in the U.S. for recreational, at least, collegiately. But wondering, and it seems like you guys have, sort of, had a -- I guess a gradual progression in terms of how you've been, sort of, building up the athletic roster for women. But feels like that's sort of accelerating. And I'm guessing -- I'm wondering if that's true or not. Also wondering what percentage of your active wrestlers are currently women. And then I guess broadly speaking, how that -- you feel that impacts your brand overtime and your relationships with the business partners?

Yes. I think Vince mentioned early on about Paul's success in the Performance Center. It kind of rekindled the memory of mine, when Paul first came and joined the management team and sat down with him, and he laid out kind of the vision he had for a little bit of help on thinking through what the, kind of, economic investment would be. And it's really -- when you see a plan kind of manifest itself and do even better than what you originally anticipated, it's great. Kind of makes you feel really good for the person who did it. So because of that success, we're going to keep building on that. I mean, I think, all of WWE's great successes have been organic, where you start small, and you build, and you build, and you build, and then it's, kind of, just a map to success and I think the Performance Center might get this. When we look back 10 years from now, it will be the same thing. It would've started in Orlando, 10 years from now, it would be around the world and feeling another round of success. So it's just been great. On the female superstars...

Yes, the female superstars represent 35% of our roster currently, and that number has grown over the past couple of years as you've noted. And again, as George mentioned and again, Paul, has been really instrumental in this, is that we basically look at the data to reinforce the fact that the women and female athletes and performers, are really resonating with our fan base. So again, whether it's on the digital or social media following, the ratings that we see when we have a women's match, the feedback we get during a pay-per-view, when there's a main event female match, has all been extremely positive. And so when we see trends like that, we're obviously going to continue to invest in it. So the acceleration has been simply a result of the success that we've been seeing, and we expect that to continue. The Mae Young Classic was our first ever female tournament that we aired on the network. And again, the viewership around that was on par with the male tournaments that we've done. So very encouraged by that. And again, we continue to get favorable response. From a marketplace perspective, even from the -- a business, kind of, sponsor perspective, we've gotten tremendous feedback around the notion of female empowerment and that we are supporting that initiative. And so, again, it's a win-win for us all around.

Nice, Great job, Paul and the rest of the team. The last question from me is on -- I think, we've talked before about eSports. Obviously, you guys have some exposure in the game market, think about your demographic, there's definitely some overlap there. It looks like you recently, maybe, took a first step in trying to monetize that avbit. You've made investment in Cloud 9. And so I'm sort of curious if you could just update us on your strategic direction on eSports, what you see there, and maybe what you were thinking with your investment in Cloud 9?

Yes, generally, as we've talked about, we have a -- we made some small venture investments. Obviously, we -- the goal as a portfolio has an economic return. But equally important to us is to invest in areas where we think there's a -- they could be strategically important over the long term. That's why we are invested in VR, other types of sports like the DRLs on Racing League. We've been looking at each sport for quite some time, specifically on how our IP would play in that, and we're continuing to work through that. But as we got smarter about the market and the players in the market, we have been looking at Cloud 9 for some time. We think they have a great management team. They have a great investor group. And when the opportunity came to invest, it kind of fell under the guidelines that we just talked about. We think there's an economic opportunity. We think there's an opportunity for us to learn about something that over time, we think it has legs. And also, obviously, they're about monetizing, subscription, advertising, events. We've got a little bit of experience in that, so we probably could be a little helpful to the management team. So it's just been all kind of "check all the boxes" for us.

And that concludes today's question-and-answer session. At this time, I'd like to turn the call over to Michael Weitz for any additional or closing remarks.

Thanks, everyone. We appreciate you listening to the call today. If you have any questions, do not hesitate to contact us. Thanks.

And this concludes today's call. Thank you for your participation. You may now disconnect.