Big bout is a certain haymaker for PPV
EmptyBulking up on PPV: 'short-term thinking'
Live gate is a whopper as well
NEW YORK -- When Oscar De La Hoya and Floyd Mayweather Jr. step into the ring Saturday night at the MGM Grand Garden Arena in Las Vegas, it will be a potential match for the ages in boxing -- and in pay-per-view as well.
The marketing machine has gone into overdrive for the fight, with the promoters (who include De La Hoya) and HBO Pay Per View tagging it as a Super Bowl and a Hollywood movie premiere all wrapped into one. And the match between the Golden Boy (De La Hoya) and an undefeated bad boy (Mayweather) could in fact deliver on the hype and break standing PPV records.
Not that anyone needs to set any records. Those in the industry say the PPV business has never packed a harder punch, with boxing, World Wrestling Entertainment, Ultimate Fighting Championship mixed martial arts cards and other programming delivering big time for the nation's 61 million PPV-enabled households.
"I don't know now many (PPV buys) this fight will generate, but I can only say to you we'll find out where the bar is set and how high this buy rate can go," HBO Sports president Ross Greenburg says. "This is the event you wait for. It will tell us where the pay-per-view business is."
HBO expects at least 1 million PPV buys for De La Hoya-Mayweather, many at the $54.95 list price, which is among the steepest ever for any PPV event.
"We fully expect De La Hoya-Mayweather to take its place as one of the biggest events in the history of pay-per-view," adds Mark Taffet, HBO senior vp sports operations and pay-per-view.
The PPV record for gross revenue was set in 2002 with the heavyweight bout between Mike Tyson and Lennox Lewis, which generated $106.9 million from 1.95 million buys, according to research firm SNL Kagan. (HBO puts the numbers at $112 million and 1.9 million buys.) Tyson-Evander Holyfield II in 1997 (the one with the ear-biting incident) drew 1.99 million buys, according to SNL Kagan.
With Saturday's clash, De La Hoya should become the highest-grossing boxer in PPV history. According to HBO, he has brought in $492 million during his career, trailing only Tyson and Holyfield.
HBO Sports has helped hype things by producing "De La Hoya/Mayweather 24/7," a four-part, behind-the-scenes look into each fighter's camp.
The PPV business has been riding high in recent years. Total PPV event revenue in 2005 amounted to $464 million, according to SNL Kagan, with $491 projected for 2006 (the figure for last year is not yet available).
Those in the industry estimate that PPV revenue has increased 75%-80% during the past three years alone. That has coincided with the rise in the number of PPV-enabled households in the U.S., which numbered only 16.5 million in 1991, the year HBO offered its first PPV bout. There are 32% more PPV homes since the 2002 Tyson-Lewis fight.
"The pay-per-view category has been robust," says Robert Jacobson, president and CEO of In Demand Networks, which does the PPV programming for such big cable operators as Comcast Corp., Cox Communications and Time Warner Cable. "A lot of that is in the boxing category, there's been a lot of successful events. But the mixed martial arts as an addition has really helped increase the amount of revenue, and (the WWE) has always been a steady performer."
In Demand estimates that this year it will exceed $1 billion in gross revenue in the category that includes sports, events, concerts and movies. And HBO had its second-best boxing year ever last year even though history's five top-grossing PPV events all came a few years back.
"They may not have one huge event that beats all records these days," says Deana Myers, senior analyst at SNL Kagan, "but they have done a great job picking very solid fights that overall draw more revenue."
One thing that seems to have kept business strong, Myers notes, is an increased focus on such Latino boxers as De La Hoya and Marco Antonio Barrera as well as on the lower-weight classes, which feature stars like Filipino whirlwind Manny Pacquiao.
Showtime also occasionally weighs in with PPV boxing and has its first PPV MMA card set for June 2.
While movie consumption has increasingly moved from PPV to the VOD platform, live sports and sports entertainment remain a draw on PPV. Overall, "boxing is still the biggest draw in pay-per-view in terms of what a single event can draw," Myers says.
But pro wrestling, a PPV mainstay, and newcomers like the UFC also have proved key.
"UFC has become huge quickly," Myers says. "They made more than an estimated $200 million in (PPV) revenue last year, up from maybe $40 million or so the year before."
"The pay-per-view business is doing great for us," says UFC president Dana White, adding that except in cases of huge boxing matches, his organization doesn't feel the need to avoid HBO or WWE events to score with viewers.
"We don't usually worry about wrestling or boxing, but we would stay away from De La Hoya," he says. "Bookers may stay away from big fights with a lot of star power, but I think a lot of fans like all three (disciplines) and will buy events from all of us."
But, White adds with a chuckle, if the others have no star power on their PPV shows, "they know we'll crush them."
WWE senior vp marketing Geof Rochester says his company also remains bullish on PPV especially given recent audience trends and the April 1 performance of WrestleMania 23, the latest edition of the annual PPV tentpole.
"We've been in PPV for more than 20 years and have likely pumped $2 billion into the industry. There has always been an ebb and flow," he says. "But we are feeling a lot of momentum right now. We have a lot of buzz going thanks to our introduction this year of celebrities, such as Kevin Federline, Donald Trump and more recently Timbaland."
While no data is yet available, Rochester predicted that WrestleMania 23 will "exceed 1 million (PPV) buys easily" at $49.95 each. The WWE's regular monthly PPV shows cost $39.95.
The record for WrestleMania revenue came in 2004 at $22.8 million, and the 2005 edition drew a record 1.1 buys. When one adds in other revenue, such as merchandise and DVD sales, WrestleMania is typically a $50 million event, Rochester notes.
"That compares to Hollywood blockbusters," he says. "Just look at a movie like 'Ghost Rider,' which made a little more than $50 million in (its first) four days. We make that money with a four-hour pay-per-view event."
Rochester and White say their firms are increasingly promoting PPV shows online to reach fans, using their own Web sites as well as such social networking sites as MySpace, Facebook and YouTube to tell the stories behind big upcoming events.
The WWE, beyond continuing to look to its own talent relations office in Los Angeles for celebrities who can bring mainstream publicity and buzz, is seeking to boost its PPV buys by featuring stars from all three of its sub brands on each PPV. Some of its smaller PPV shows last year underperformed past events and company expectations.
Raw, SmackDown! and ECW, which all have their own regular TV shows, are distinguishable WWE brands, "but our fans love when they get to see matches involving all three on PPV," Rochester says. "Think of it like an all-star game with your favorite athletes."
White says his organization also has PPV upside ahead.
UFC has had success booking cards on dates that others traditionally shy away from, such as the Saturday before the Super Bowl, Memorial Day and Easter weekends and the weekend after the Fourth of July, helping to expand the PPV market, White notes.
While UFC doesn't disclose PPV buys or revenue generated by specific events, White says his outfit's biggest PPV buy rate ever came for a year-end 2006 show that featured Chuck Liddell defeating Tito Ortiz. Observers estimate the overall revenue generated by that card at $50 million-plus.
UFC has become one of the largest PPV program providers by going from a handful of events a year six years ago to 10-11 now. White says there could be room to make it an even dozen.
Add in the PPV shows organized by Japanese MMA league Pride Fighting Championships, which UFC recently acquired, and the combined entity could put up more than 20 PPV shows a year.
White says he plans to keep the cost of UFC PPV shows steady at $39.95 but raise the Pride price tag to that level from $34.95. "We want to keep the brands separate but maybe once a year do a Super Bowl of MMA, if you will," he says.