What does Mayweather-Pacquiao bout say about potential of PPV?

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By Greg Joslyn.

Weighing in at well over 3 million viewers, tomorrow night’s broadcast of the welterweight title fight between Floyd “Money” Mayweather Jr. and Manny “Pac-Man” Pacquiao will shatter the record for pay-per-view. The previous record was Mayweather’s 2007 match against Oscar De La Hoya, which fetched 2.48 million PPV viewers.

Mayweather’s take—his 60% cut of the PPV proceeds, ticket sales and any number of ancillary sources of revenue—could top $200 million. “Money” indeed!

So what is it about championship boxing that makes it a natural for PPV and what are the takeaways for the rest of the media industry?

  • Quality sells. While heavyweights typically command the most interest—think Ali v. Frazer or Holyfield v. Tyson—this matchup between an undefeated “boxer” (Mayweather) and a lefty slugger (Pacquiao) has captured the imagination of fans around the world.
  • Specialization sells. The Super Bowl has broad appeal, with 100s of millions of casual fans tuning in—some for the game, some for the halftime show and some … for the commercials. It’s no wonder the big game follows a traditional advertising model. Soccer’s World Cup or the Olympics are weeks-long spectacles with viewers–who at any other time wouldn’t be caught dead watching Greco-Roman wrestling or Paraguay v. Ghana–checking in and out. They would lose serious momentum if they tried PPV. But a discrete, high-quality event with a relatively modest but passionate fan base? Boxing is a PPV no-brainer and owners of other specialized content would do well to take note.
  • Flexibility sells. In the U.S., Mayweather v. Pacquiao is being carried jointly by HBO and Showtime, two cable rivals whose historical animus evidently is trumped only by their appetite for cash. No doubt the fight promoters pushed the strange bedfellows together in the interest of reaching the widest possible audience on cable. A wise–and lucrative–move.

But wouldn’t greater flexibility sell even more? What if the owners of this premium content had a way to maximize their PPV reach to include any device in the world with an Internet connection?  Early estimates for the PPV audience were close to 4 million, but experts subsequently tempered that forecast when they factored in piracy. Doubtless most pirates simply want to avoid paying $100 to watch the fight on cable. But it is safe to assume that some percentage of them don’t have access to Showtime or HBO and, thus, have no other options. Would some of them swear off their pirating ways and pay to watch if only they could?

Similarly, might some demographically desirable viewers agree to answer a few questions about themselves and then watch highly targeted ads between rounds in lieu of the $100 PPV fee?

And, finally, about that $100—who’s to say it’s the right price? Wouldn’t a more sophisticated approach set the pricing dynamically to maximize revenue across all different distribution channels?

Win or lose, Money Mayweather will do just fine tomorrow night, so long as he avoids Pac-Man’s left hook and the Vegas casinos after the fight … But he might have done even better.

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