The question: did increasing the cost of PPVs to $39.99 from $34.99 hurt WWE?
Let's look at all the PPV results they announced this quarter vs last quarter. I'm looking at domestic buys @ domestic prices. So that's 63% of the buys for 2005 at $34.99 and 61% of the buys for 2006 at $39.99.
# of buys decreased (2005 vs 2006)
JUDGMENT DAY: 266 -> 252; $5.9m -> $6.1m (+$284k)
ECW ONS: 333 -> 304; $7.3m -> $7.4m (+$75k)
VENGEANCE: 429 -> 337; $9.5m -> $8.2m (-$1.2m)
GAB: 279 -> 232; $6.2m -> $5.7m (-$491k)
SUMMERSLAM: 634 -> 541; $14m -> $13.2m (-$779k)
NO MERCY: 224 -> 197; $4.9m -> $4.8m (-$132k)
ARMAGEDDON: 280 -> 239; $6.2m -> $5.8m (-$342k)
overall for decreased buy PPVs: -$2.6m
# of buys increased (2005 vs 2006)
UNFORGIVEN: 240 -> 307; $5.3m -> $7.5m (+$2.2m)
CYBER/TABOO: 207 -> 228; $4.6m -> $5.6m (+$1m)
SURVIVOR SERIES: 375 -> 383; $8.3m -> $9.3m (+$1m)
overall for increased buy PPVs: +$4.3m
[b]total change in domestic PPV revenue for these ten PPVs in the 8 month period from 2005 to 2006: +$1.65m[/b]
2005 domestic revenue of these PPVs total: $72.0m
2006 domestic revenue of these PPVs total: $73.7m
There were two other PPVs listed: Backlash (no 2006 buyrate listed) & ECW December to Dismember (no 2005 comparison.)
Looking at the Key Performance Indicators, it looks like:
Backlash 2005: 308k buys = 194k domestic buys = $6.8m domestic revenue.
Backlash 2006: ~240k buys = 146k domestic buys = $5.9m domestic revenue.
ECW D2D: ~$2.2m in domestic revenue.
Again, there this doesn't mean WWE made $72m last year on these PPVs. They only get a cut of the total domestic revenue. I was under the impression it was about $15 of the $40 domestic price. Let's check the numbers...
The report said they made $53.4m for this period for PPVs. 61% of the buys were domestic so let's take 61% of that revenue, so $32.57m domestic revenue. The total for 2007 was 3287 PPVs buys (or 3110 if you don't include prior events). 3287 x $39.99 x 61% = $80.182m. ($75.865m if you're discounting the Prior event buys.)
So, $32.57/$80.182 = 41%. ($32.57/$75.865m = 43%.)
41% of a $39.99 price (i.e. what WWE gets for a domestic buy) is $16.25.
(43% of a $39.99 price is $17.17).
So, my fifteen dollar estimate seems pretty close. Also, that means the ECW PPV gave WWE about $16.25 x 90k buys x 61% = $892k. I think it costs at least a $1m to run a PPV so they definately didn't make money on that one domestically!
Now, my figures have 2006 being better than 2005 while the actual PPV revenues were $53.4m (2006, 8 month period) vs $54.5m (2005, 8 month period). Why the difference? Because they didn't include any 2006 Backlash PPV revenue in their numbers this year. Essentially, those numbers compare 2005 Backlash vs 2006 ECW D2D, which obviously is going to favor 2005 numbers. As I show above, if you compare the PPV buys on a per-PPV basis, overall, the 2006 numbers are superior.
What we're seeing here:
* Summerslam was bound to go down. Hogan/HBK was a HUGE success in 2005 so 2006 numbers were going to be weaker. The price increase really offset the difference so it was probably a very good move and really took advantage of the fact that core WWE audience buys the major PPVs (RR, Surv Series, Summerslam, Wrestlemania).
* Unforgiven had a huge improvement over last year. (CENA/EDGE TLC, 2006) vs (ANGLE/CENA, 2005).
* Moving the "CHOOSE YOUR OWN ADVENTURE" PPV (taboo tuesday) to the traditional day, Sunday, vastly improved the buys & profit.
* ECW ONS and Judgment Day actually made more money with less buys this year!
* There were two PPVs with Hell in the Cell stipulations in 2005: RAW's Vengeance and Smackdown's Armaggedon. HITC is one of the stipulations that has shown to still increase buys quite a bit. It was natural that straight matches (DX/Spirit Squad) and (Batista/Cena vs Booker/Finlay) would not be as strong the next year.
In the end, there are two PPVs where buys were down and generated less revenue than last year.
SMACKDOWN GREAT AMERICAN BASH (Booker/Mysterio, 2006) vs (JBL/Batista, 2005)
SMACKDOWN NO MERCY (LASHLEY/BATISTA/FINLAY/BOOKER, 2006) vs (Batista/Eddy, 2005)
So, it looks like Smackdown branded PPV shows without a strong gimmick stipulation (i.e. Hell in the Cell) were probably hurt by the price increase & decreased interest in Smackdown. However, on the whole, it doesn't look like the price increase negatively affected business at all!