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I Pay-p«r*vi«w aarkatlni. .p.lBaCai Subf v*lu« Discovery.p.3 <br />High basic • low pay pen.7.p.4 <br />Dec. cable & pay TV census.p.4 <br />Top-50 NSO Marketing stats.p.6 <br />Systaa Marketing contacts..p.7 <br />Senior Analyst: Larry Gerbrandt <br />Assoc. Analyst: Bill Harchettl <br />Research Assoc.i Karen Weill December 16, 1991 <br />WMIL KMAN AMOClATIt, INC. <br />126 CLOCK TOWER PLACE <br />CARIMIEL. CAUFORNIA 93923^734 <br />(406) 624-1S36 <br />e <br />r • <br />Greater investment in pay-per-view marketing continues to pay off <br />in higher PPV revenue and buy rates, suggests a PKA analysis of data from 37 <br />cable systems responding to our 1991 PAY-PER-VIEW CENSUS. <br />To try to quantify the impact of PPV marketing expenditures on PPV <br />buy rates and revenue, we examined data from systems serving 1.3 mil. addres­ <br />sable subscribers. (Key benchmarks appear below; full results are on P. 2.) <br />Respondents supplied average ticket prices and buy rates from August <br />1991 for PPV films and from January through August for events. They also in­ <br />dicated PPV marketing costs as a percentage of PPV revenue. <br />The suinnary table below compares the sample group's top-five and <br />bottom-five performers as measured by PPV revenue/addressable sub--and reveals <br />significant differences in the level of PPV marketing spending. <br />e The top-five systems spent 1.6x more on PPV marketing as a per­ <br />centage of PPV revenue than the bottom five (7.6Z versus 4.7X). <br />e More telling, the top five spent 8.5x more on PPV promotion per <br />addressable sub/mo. than the bottom five (176 versus 26). <br />• In return, the top five generated 6.lx higher PPV revenue/ <br />. addressable sub/mo. and 11.Ox higher PPV movie buy rates. <br />Avg. PPV <br />Hktg. Costs <br />Avg. PPV <br />Hktg. Costs/ <br />Avg. Net <br />PPV Revenue/ <br />Avg. Movie <br />Buy Rate <br />Sample group t Net PPV Rev.Addr. Sub/Mo .Addr. Sub/Mo.Auoust 1991 <br />Top-five systems 7.6Z,% .17 $2.26 75.8Z <br />All 37 systems 4.9 .06 1.08 28.5 <br />Bottom-five systems 4.7 .02 .37 6.9 <br />(0 1991 Paul Kagan Associates, Inc. estimates. <br />Broad conclusions cannot be dra%fn from the numbers because so many <br />factors beyond marketing spending affect PPV buy rates--from ease of ordering <br />to number of channels, type of product, pricing, PPV penetration and discre­ <br />tionary income among addressable subs. <br />(continued on next page) <br />FXX The Best View <br />of the Business World <br />DAYTIME <br />• East Coast 201-585-6427 <br />• West Coast 818-840-3487 <br />• Midwest 313-643-9033