My Thoughts on WWE's PPV Strategy
by, 10-22-2011 at 06:11 PM (4640 Views)
First off, I would like to say that I do not often post on this website and that this is my first blog. Second, I feel guilty about writing this about a day after RatedATB posted a blog entry about WWE PPVs. While RatedATB wrote more-so on which PPVs should be shown and I'm writing on pricing and the number of PPVs, I still feel guilty, especially on the count of my suggestions section. For those interested, you can view RatedATB's entry here.
I'm writing today because I was thinking about why I never buy WWE PPVs and thought I should collect my thoughts on it. Here are the bullet points.
Expensive â€“ The most glaring problem I see with WWE PPVâ€™s is that they cost $60. Who would pay $60 for a PPV? Oh wait thatâ€™s my next section. Back to the point, I hear there are several ways of watching the PPV for less cost, including: group viewings, finding a movie theater or bar that shows it, WWE.com, or an illegal stream.
Now Iâ€™m an ethical person and donâ€™t deal with illegal streams; I just flat out donâ€™t watch the PPV. However, I have faith that most people are willing to pay the right price for a quality product. However WWEâ€™s are not at the right priceâ€¦ nor are they quality products for the most part, but weâ€™ll get to that later.
Target Market â€“ As mentioned above, $60 is a lot to pay for a PPV. If you think about it in terms of hours of entertainment per dollar, itâ€™s about eight times more money efficient to rent a DVD. So who would pay for a $60 PPV? Iâ€™ve narrowed it down to three types of people.
- Kids â€“ Kids are stupid. I hate to play that card but itâ€™s true. For example, when I was a kid I bought WWE PPVs. Now I donâ€™t.
- Parents â€“ Anything to get the kid to shut up.
- Rich People â€“ What is $60 in the grand scheme of things to a rich person; they buy $100 bottles of wine to get drunk.
Now the problem with this scenario is that kids donâ€™t have money; their parents do. If they were my parents they would tell me to earn the $60 instead of just giving it to me. So unless WWE is planning solely on the business of rich people, this price just doesnâ€™t work.
Variable and Fixed Costs â€“ Now letâ€™s try to get into the reason $60 is the established price. WWE has to have substantial fixed costs with the salaries they pay. High fixed costs are typically offset by selling lots of products, which in this case translates to more PPVs and shows.
However, by reducing product quality (mentioned in the next section) and giving consumers higher prices, demand is reduced. This means that even though the WWE is producing more PPVs that are being bought, less people are buying each PPV.
We also have to take into account the variable costs of each PPV including: stage setup, broadcast costs, and bonuses paid to the wrestlers.
To summarize, unless the WWE is trying to take advantage of the people who are willing to pay $60, in which case screw them, I can understand why WWE feels the need to charge $60 but have doubts as to whether or not itâ€™s the right choice.
Too Many PPVs â€“ As mentioned above, too many PPVs cause a decrease in demand for PPVs. I believe two factors cause this:
- Financial Burden to Consumers â€“ Itâ€™s hard to pay $60 for Night of Champions then turn around and pay $60 for Hell in a Cell two weeks later. A little time to breath would be nice instead of shoving PPVs down our throats.
- No Buildup â€“ Once again, two weeks to build-up a PPV does not make the PPV significant enough to be worthy of purchase.
How to Change WWE PPVs â€“ The first suggestion I would make is reduce the number of PPVs. I feel eight would be a good number of PPVs to have, as 52 weeks divided by eight leaves 6.5 weeks of buildup on average. This could mean that all PPVs are promised six weeks of buildup and there is four weeks left to allocate amongst the big PPVs.
Hereâ€™s the PPV lineup I would do (credit to RatedATB where due for writing it first).
- Backlash â€“ It is a PPV tailored to be the fallout of WrestleMania, hence the name.
- King of the Ring â€“ This could be the Royal Rumble equivalent to SummerSlam. As Rated ATB said, by having the King of the Ring winner face the champion of their choosing at SummerSlam, the King of the Ring tournament could legitimately build up a wrestler to championship contender level, instead of making the title meaningless by giving it to them on a silver platter with the MitB contract.
- SummerSlam â€“ The WrestleMania of the summer.
- Extreme Rules â€“ I believe, barring stupid decisions on WWEâ€™s part that this gimmick PPV could work, because fans want to see these types of matches.
- Survivor Series â€“ This is kept out of historical sake rather than real value in the PPV.
- Breaking Point â€“ Once again, barring stupid decisions on WWEâ€™s part, this PPV could work. I find the idea of two wrestlers without submission expertise getting a tap-out victory refreshing. One thing that would have to happen is more emphasis on submissions in all matches, not just the main events. Also, matching wrestlers with submission finishers against wrestlers without submission finishers is a dead giveaway as to whoâ€™s going to win. Iâ€™ll allow an I-Quit match for the main event.
- Royal Rumble â€“ The only thing I want to bring to attention is making the Royal Rumble the â€œgo-homeâ€ PPV for WrestleMania. This would increase the focus on the Royal Rumble winner and make the PPV even more meaningful, as it locks in the main event at WrestleMania.
- WrestleMania â€“ Nothing to say.
Now I spent a lot of time talking about the $60 price tag for a PPV, so of course I would recommend a price reduction as well. I cannot pretend to name an accurate price for business purposes, as I do not know how much revenue needs to be generated to offset costs. All I can say is that I wonâ€™t consider any price above $20.