Shane McMahon Talks Up Launch of VOD Company in China
You On Demand CEO says PPV marketing experience, Chinese demand for low-cost entertainment and industry partnerships are the formula for breaking into a traditionally tough market.
Shane McMahon is best known for his role as a former top executive and occasional wrestler in the WWE, but these days he has his sights trained on China.
On Monday, McMahon spoke in New York at the 40th annual Global Media and Communications Conference -- his first investors conference, he said -- and gave a pitch for YOU On Demand, his new VOD company that will be out of beta and launching officially in the first quarter of 2013.
When Hollywood looks at China, two things typically come up: the prevalence of piracy in the country and the import quotas that the government imposes on foreign studio films.
For McMahon, both present unique business opportunities.
"When you look at the pirated DVD market in China, we all think it's free," he said. "But that's not really true. Consumers bought $6 billion worth of pirated entertainment. Now, if you gave these people a better and easier way to click and play this content from home, all of our testing shows there will be a boom in purchases."
That's McMahon's bet at least.
For the past two years, the former wrestling executive has been engineering what he calls "blocking and tackling" to make it happen.
He first became involved in the company when it was a penny stock. Soon after, the company changed its name, engineered a 75-to-1 reverse stock split, cleaned up its debt and uplisted the stock to Nasdaq.
You On Demand intends to be something akin to the Netflix of the Chinese market, and to that end, the company has signed a 20-year joint venture agreement with the Chinese broadcaster CCTV-6 and its pay-TV arm, China Home Cinema. The deal means the New York-based company can tout being embraced by a Chinese media giant, which McMahon hopes means that YOU On Demand is in the Chinese government's good graces as the first and only company to be licensed to operate a PPV service in all provinces in the country.
McMahon has also struck deals to license content with many Hollywood studios, most recently Universal Pictures, after making similar agreements with Warner Bros., Disney and Paramount. The company hasn't yet made content agreements with Fox and Sony, and McMahon is vague on why not -- saying those deals "will be done as soon as we want to."
When the company launches in the first quarter of 2013, McMahon says You On Demand will reach 13.2 million households -- "larger than Time Warner Cable's footprint," he says -- with the goal of being in 30 million homes by the end of 2013 and 200 million cable households by 2015.
It's an ambitious plan, and at the moment, stock investors seem a little dubious. The company's stock price now trades at $2.32 per share, down from $7.50 in February. McMahon says that at a $50 million market cap, investors have undervalued his company, but he says he's used to pinning the skeptics.
At the WWE, McMahon says that for a long time, many people didn't believe that Mexico could be a vibrant PPV market before it began thriving.
As for China, McMahon says, "No country needs an aggregator more right now. Hollywood wants an aggregator there. And China doesn't know how to put it all together... That's why we're there."
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