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WWE Financials: PPV business break down - Royal Rumble, Chamber, WM26

May 6, 2010 - 8:21:04 AM
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By James Caldwell, Torch assistant editor

WWEscratchlogo_2.gif
Concerning WWE's pay-per-view business, WWE's first quarter 2010 earnings report shows international buys are helping off-set a decline in domestic buys.

The reason could a number of factors. The main options include the $5 price increase, WWE's claim that more people are buying PPVs in groups, or a general decline in PPV interest domestically.

WrestleMania 26 was the hardest hit, as overall PPV buys declined to 885,000 buys. That's down from 960,000 WrestleMania buys the previous year, 1.06 million buys in 2008, and 1.18 million buys in 2007.

Beyond the actual number of PPV buys, there are more prevalent concerns when looking at how much money WWE is actually receiving from each PPV buy.

According to WWE's financial statement, WWE's first two PPV events of the year, the Royal Rumble and Elimination Chamber PPV, generated $13.4 million in PPV revenue.

RoyalRumble2010.jpg
The Royal Rumble drew 462,000 buys and the Chamber drew 285,000 buys. Both were up around 13,000 buys compared to the previous year.

However, dividing the $13.4 million revenue by the combined number of buys, it's only $17.93 in WWE's pocket per buy. Considering WWE raised the price point domestically to $44.95, it's not a good number.

The price point increase resulted in WWE only receiving 39.8 percent of that price tag from the Rumble and Chamber. From 2007 to 2009, WWE's per-event percentage was in the range of 41.6 percent to 44.5 percent.

Cable/satellite companies are getting their cut, but the percentage reflects more buys from international fans receiving the PPV at a much-lower price and fewer buys from domestic fans being asked to shell out $44.95 for a standard WWE PPV.

As identified in the financial report story, WrestleMania 26 generated $19.0 million of PPV revenue. However, with 885,000 buys, WWE's share of the $54.95 price tag was only $21.46 per buy.

The percentage is 39.1 percent, which is even lower than the combined percentage from the Rumble and Chamber PPVs.

What's the conclusion to draw? WWE isn't reaching their core domestic fanbase and enticing them to order PPVs. Or, there could be some validity to WWE's claim that more people are gathering in groups to watch PPV events, thus lowering the number of PPV buys. Either way, WWE has to improve how they market the PPVs to the audience and make the events seem like must-watch events that won't be topped by what happens the next night on WWE Raw.


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