After enduring a virtual drought of pay-per-view boxing
events in 1998, the industry is now faced with a challenge: how to spread its marketing
efforts around four major fights potentially scheduled in the first quarter of 1999.
While some operators will spend heavily on the first event
-- a proposed Jan. 16 Mike Tyson bout -- others will attempt to disperse their marketing
dollars evenly over all four fights. Either way, operators, not willing to look a gift
horse in the mouth, said they were happy for the opportunity to generate PPV revenue.
The first quarter will give operators an opportunity to
make significant PPV-revenue gains during the three-month period. The potential lineup --
a Jan. 16 Tyson-Frans Botha fight, a Jan. 23 George Foreman-Larry Holmes bout, a Feb. 13
Oscar De La Hoya-Ike Quartey match and a March 13 Evander Holyfield-Lennox Lewis fight --
could easily gross a combined $125 million.
That figure easily dwarfs the estimated $40 million in
total revenue that the category generated in 1998, according to Showtime Event Television
figures.
Further, the number could put the industry more than
halfway toward eclipsing the record $232 million that the boxing genre earned in 1997.
"Given what happened [in 1998], with the scarcity of
boxing events, this is a great way to begin 1999," said Joe Boyle, vice president of
corporate communications for Viewer's Choice.
MARKETING PROBLEMS
But industry executives said it wouldn't be easy earning
those millions of dollars. The scheduling of four major PPV events within a 90 day period
-- not to mention at least six pro-wrestling events, including the World Wrestling
Federation's popular WrestleMania franchise in March -- will provide a number of
operational, billing and marketing challenges for the industry.
Operators will have to be more creative in identifying ways
to stretch their limited PPV-marketing dollars to provide adequate promotional support for
each event. Although rate cards for three of the four events have not been released, most
operators expected each to have a split structure based on the amount of marketing dollars
spent. The Holmes-Foreman rate card, for example, is a straight 50-50 split based on a few
marketing tactics.
Given the fact that prior heavyweight championship fights
have levied very heavy tolls on operators -- Tyson fights, in particular, have included
heavy spot-ad schedules -- operators feared that it will be nearly impossible to satisfy
everybody.
"I'm worried about how much money I'm going to have to
spend in a short amount of time," said Ted Hodgins, manager of PPV for Media General
Cable.
But event executives were confident that operators will
step up to the plate and market each event adequately. "It's a huge opportunity to
blow out PPV revenues in the first quarter, and if the operators are smart, they should be
able to balance out the events," said Mark Greenberg, executive vice president,
corporate strategy and communications for Showtime Networks Inc., which will distribute
the Tyson event. "I think that all of the fights will do very well."
Dan York, vice president and general manager for TVKO --
distributor of both the De La Hoya-Quartey bout and the proposed Holyfield-Lewis fight --
said all of the events benefit when there is additional promotion in the marketplace. He
added that operators' PPV-marketing budgets are generally plentiful in the first quarter,
which allows for less restricted spending.
"The current scheduling of the proposed events
provides enough time for adequate exposure, and the mega-events all draw the public's
attention to boxing," he said. "The success of each event will fuel the success
of the other events."
OPS GET BEHIND TYSON
Several operators looking to get out of the block quickly
will put a major emphasis on the Tyson bout. The fight would mark Tyson's first action in
the ring since he was banned last year for biting Holyfield's ear during their June 1997
fight. The Nevada Athletic Commission rescinded its ban on Tyson in October, clearing him
to fight again.
Insight Communications Co. of Columbus, Ohio, has already
developed a value-added promotion for the planned Tyson fight, even though it has yet to
be officially announced.
The system will offer a rebate to subscribers who correctly
choose the over/under round when the fight will end, said Gregg Graff, senior vice
president and general manager for the system.
Insight will rebate $20 to subscribers correctly guessing
whether the fight will go "in the neighborhood" of five rounds. Subscribers will
have to order another PPV-boxing match within six months to take advantage of the offer.
Graff said the system implemented the rebate to bring
boxing fans back to PPV. He added that the deal helps to alleviate fears that the fight
may end in an early knockout.
"Our theory is that people are afraid of Tyson fights
going short, so this is an incentive for people to order," he said.
Rick Lang, director of marketing for Cable One, said the
January fights, in particular, are important to get the business up and running quickly.
"We want to come out of the gate strong, so we'll put a lot of marketing muscle
behind Tyson," he said. "After that, it will come down to being sensible with
all of the events in the market."
Despite the heavy emphasis on Tyson, Graff feels that the
other fights will generate their share of buys. The system is also expected to
aggressively promote the Foreman fight.
"We had a pretty serious drought last year, so people
haven't spent a lot of money on boxing," he said. "It's not so much when the
fights fall, but the number of events that occur. The way that the events are scheduled
isn't too bad."
Other operators are working on plans that will effectively
spread marketing dollars equally across all of the events.
BenchMark Communications Inc. has developed a PPV-marketing
plan that spans several months to better analyze and develop campaigns for scheduled and
potential events. "We know the tactics that we use for events: We just have to
execute the plans. I wouldn't want to put my eggs in one basket," said Amy Bobchek,
director of sales and marketing for BenchMark. "It's difficult -- you have to be very
strategic in how you do things."
BILLING PROBLEMS
Operators were also concerned about potential billing
problems arising from subscribers purchasing most or all of the events. Many operators
have ceilings on monthly customer spending that would have to be altered to allow for
purchases. With the events ranging from $35.95 to $45.95, those limits could cause
customer-service nightmares.
"The [billing] triggers could deactivate the account,
which could tie up phone lines and slow the process of order-taking for the next
event," Lang said.
Along with marketing concerns, some operators were worried
that the events will cannibalize each other. "It will be interesting to see what
people will choose to purchase if they have to make a choice," Bobchek said.
"I think that it'll be a great first quarter, but I'm
worried about how much money subscribers will be able to spend on boxing," Hodgins
added.
Meanwhile, some event executives were also concerned that
operators will become complacent if the first quarter turns out to be a revenue bonanza.
"Reinvesting in the business is more critical now than
ever before," Greenberg said. "If you're going to generate unexpected profits,
then you should reinvest so that you can gain even more unexpected profits."
One PPV executive at a top 20 system also worried that his
ability to spend on midyear and late-year PPV events could be curtailed because early PPV
events could actually satisfy PPV-budget projections.
"Corporate may not look to put more money into PPV if
we surpass projections early," the operator said.
