Pay Per View Has a Future. Again.

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Last month, executives from Home Box Office Inc. broke bread with the top marketing and pay-per-view executives from virtually every large and small cable-system operator at the Cable & Telecommunications Association for Marketing Summit in Boston.

The parties chatted about HBO’s plans for distributing boxing events. What’s so newsworthy about the encounter? HBO and operators hadn’t willfully gathered at any major cable show to talk about the bright future of the event business since the late 1990s.

In recent times, operators have shunned pay per view — which largely revolved around boxing — for slicker, sexier applications such as high-speed Internet access and telephony.

Now, PPV is looking attractive again. And the best thing for operators is that they can deliver more pay-as-you-go events while continuing to kick it with their new money-makers.

It seems that the resurrection of the high-profile, big-ticket events — we’re talking $35 to $50 per event from each interested household — is happening in spite of new cable technologies.

Before I go on, some history. Fifteen years ago, operators were virtually begging event providers for live pay events they could offer consumers at the push of a button that they would not see on free or subscription TV.

Operators threw hundreds of valuable local ad spots at HBO, Showtime Event Television, Semaphore Entertainment Group, the former World Wrestling Federation and other event promoters. They wanted to get the word out about the next Mike Tyson fight or the upcoming Rolling Stones concert. And they were rewarded mightily.

At its peak in 1999, the live pay-event business put nearly half a billion dollars in the pockets of operators and event providers.

But eventually the goose stopped laying golden eggs. Tyson started biting and kicking opponents instead of knocking them out; Hulk Hogan got old; and even hard-core Stones fans got tired of paying to see a wrinkling Mick Jagger.

By 2001, revenue had dropped by 40% and marketing support for the category had melted away faster than Kirstie Alley’s love handles.

Meanwhile, operators became smitten with new products such as digital cable, broadband Internet access and telephony. The once burgeoning pay-event category became a wasteland for non-competitive boxing matches and Sylvia Browne psychic shows.

But now events are back in vogue. While it’s unclear how much revenue the industry has garnered today, one operator executive in the Northeast said she hasn’t seen this much revenue from the category at any time during this millenium.

With the help of quality and competitive boxing matches featuring such marquee fighters as Oscar De La Hoya, Bernard Hopkins, Jermain Taylor, Marco Antonio Barrera and Floyd Mayweather, HBO itself is on pace to break its 1999 all-time PPV revenue record of $200 million.

World Wrestling Entertainment Inc. — one of the few consistent big earners on the pay event box office — has stepped it up over the last couple of years. After struggling in the first part of the new millennium, the WWE’s Wrestlemania event has generated 1 million buys and over $40 million worldwide in each of the last three years.

Joining WWE and HBO in the category’s renaissance is the Ultimate Fighting Championship. Considered a burned-out sport in 2001, Las Vegas-based Zuffa Ltd. has resurrected the mixed martial arts property to the point where it is averaging a remarkable 200,000 to 350,000 buys for each of its monthly events

The reason for the category’s metamorphosis? Event producers got smarter about marketing their wares. Instead of fighting toe to toe with new cable services for limited advertising and marketing resources, they are using those new technologies to bring the noise to consumers.

Instead of giving operators better PPV revenue splits for running 1,000 fight commercials via local spots, HBO is now financially rewarding operators who run fight video ads on their Web sites or send e-mail blasts promoting a fight to their broadband customers.

WWE and UFC are aggressively touting their events through their popular, video-rich Web sites. Further, companies are taking advantage of wireless technology by sending alerts for upcoming events to fans with cell phones.

With the event business back in pay dirt, HBO is probably already planning next year’s dinner at the CTAM Summit. The way things are going, the Stones might ask for seats at that dinner to promote their next pay-per-view event.

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