Pay-per-View Video Economics: How Video Providers Can Become Profitable
Earning money from Pay per View (PPV) is not a given, but it is highly achievable, given the right amount of research and dedication. One of the big secrets to making PPV profitable is to provide a product that people actually want. A lot of this is about knowing your potential audience, and what kind of content they are willing to pay for.
An example of this is the recent Floyd Mayweather, Jr. vs. Manny Pacquiao fight which made more than $410 million in PPV revenue for the HBO and Showtime partnership, despite being regarded as a disappointment by boxing experts.
How is it possible that money was made from such a disappointing event?
PPV audiences tend to have a huge appetite for live sporting events, especially for sports such as boxing where major bouts are generally only screened via PPV as opposed to on Network TV. The build up to events such as the Mayweather and Pacquiao fight is huge; it was billed as the Fight of the Century. Even with individual pricing of $89.95, plus $10 for viewing in HD, there was plenty of interest in such a high profile event; the perfect example of providing a PPV service that is what the viewers want, and secures revenue.
What sort of PPV content sells?
Live sporting events are undoubtedly a major seller on PPV. The Mayweather and Pacquiao fight is the largest revenue producing PPV event in history; overtaking the previous record holder which was the Floyd Mayweather, Jr. vs. Saúl Álvarez fight in 2013. PPV has come a long way since the first boxing match, the Thrilla in Manila, was screened on PPV in September 1975. In the early days of boxing on PPV there was still significant revenue to be acquired, the Roberto Duran vs Sugar Ray Leonard in 1980 was offered for viewing at$10; an offer which was taken up by approximately 155,000 customers. This was nothing compared to the huge amounts changing hands today though.
Boxing is not the only sport which has a large PPV following, fans of The Ultimate Fighting Championship (UFC), are also dedicated PPV viewers although, according to research at the University of Missouri, they have very defined viewing habits, as opposed to the wider interests of fans attending UFC events in person. In his research Nicholas Watanabe found that heavyweight contests are vastly more popular on PPV, whereas there is no apparent preference for those attending the event itself.
This suggests that PPV events need to have a wide appeal to viewers who may have an interest in a sport but are more likely to be attracted by high profile content than they are by day to day events.
Music on PPV
Live performance can provide an important revenue stream for those involved with the music industry; both performers and content providers. As more people share and stream music, so the amount of money to be made from music production is decreasing. This makes the revenue to be made from PPV music events even more vital.
Providers such as Living Indie are looking to gain from the appetite for live content. Living Indie currently work with indie musicians to provide free online access to gigs. Once the service is completely up and running the aim is to provide free ad supported contented, with charges for ad free content, and a subscription model.
The future looks bright for PPV
There is certainly significant revenue to be made from PPV content, especially in the sport and music arenas. The trick is to know your market. Sports content generally does better if it appeals to generic fans of a genre such as boxing, whereas there seems to be rising potential in the music industry to work with musicians to bring live events to their fans, recouping some of the revenue that has been lost from reduced music sales.