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The Pay-Per-View Prize

12/05/2007 7:45 AM

With Christmas still several weeks away, it’s probably too early to take a nostalgic look back at 2007. Even so, it’s hard to ignore the big revenue punch the pay-per-view event category provided to the cable industry during the year.

In a year when HDTV, Internet-protocol telephony and broadband technologies dominated the headlines, the old, creaky PPV-event category is on pace to enjoy its most lucrative and high-profile year ever.

As usual, the three-headed ring-sports monster of boxing, wrestling and mixed martial arts led the way.

It’s too early to project total PPV-event revenue for the year, but bet safely that when all 2007 receipts are calculated, the revenue tally could approach a record $550 million to $600 million, according to several PPV event executives.

Home Box Office’s pay-per-view arm alone has already generated more than one-third of that revenue total in route to its best PPV-boxing year ever. 

Even before operators have a chance to count the buys for this Saturday’s (Dec. 8) bout between “Pretty Boy” Floyd Mayweather and undefeated champion Ricky Hatton, HBO will have generated more than $200 million in boxing revenue from its eight boxing events thus far, according to the company. 

That includes the industry-record $134 million generated from HBO’s high-profile May 5 fight during the National Show in Las Vegas. (Not the one involving the network’s former boss, mind you.) 

That Oscar De la Hoya-Mayweather bout defiantly answered boxing critics who said the sport was a relic of the glorious 1980s and 1990s, an era when names like former heavyweight champions Mike Tyson and Evander Holyfield seemingly drew 1 million PPV buys — and more than $50 million every time they stepped into the ring. 

Vince McMahon and World Wrestling Entertainment continued to consistently deliver revenue to the category through monthly PPV event extravaganzas. The outfit has already generated $160 million in PPV revenue worldwide (more than 80% of it generated via U.S. PPV) through nine months of 2007, with three PPV events left before year’s end, according to WWE executives.

The mixed-martial-arts genre, led by the Ultimate Fighting Championship, has sustained a remarkable PPV run. 

Although the UFC stubbornly refuses to release revenue figures, Sports Illustrated reported earlier this year the company generated nearly $220 million in PPV revenue in 2006. While it is unclear whether the UFC will match that level this year, it certainly won’t be too far off.

The pay-per-view category’s explosive year can be traced to a number of factors, including better marketing from operators and distributors; more exposure to main event fighters through cable and online outlets; and a better viewing experience through the advent of HDTV and digital sound.

But the greatest catalyst for PPV’s success is also the most elementary: event providers, wary of competition from each other, are giving viewers events they want to see. 

“It’s been a terrific year for the category because everyone is performing at the top of their game,” said In Demand Networks CEO Robert Jacobson.

 

But nothing draws viewers and their money to PPV quite like a marquee prize fight. The 2.4 million buys the De la Hoya-Mayweather fight drew showed that there’s still some revenue magic in the genre — so much so that other entertainment genres are being lured into the ring.

Just last week, In Demand declared it’s teamed with the Metropolitan Opera to deliver eight performances from the renowned opera house on an on-demand transactional basis beginning in January. 

The PPV industry hasn’t seen such highbrow programming since Luciano Pavarotti belted out some tunes during the Met’s 25th anniversary PPV special in 1991.

And HBO will offer at least two auto-racing PPV events in 2008. 

And of course, the three ring sports will continue to aggressively punch, grapple and slam their way into viewers’ homes via PPV in 2008.
 

So with Christmas a few weeks away, the industry has already received an unexpected gift from an old friend — one operators hope will keep on giving well into the new year. 

September