The Revenue Model
Revenue #1 Description - Pay Per View
Pay Per View is a system of viewing individual television programmes for an additional charge over and above that for the standard service; normally used on cable and satellite systems
'Pay-per-view provides a service by which a television audience can purchase events to view via private telecast. The broadcaster shows the event at the same time to everyone ordering it. Events can be purchased using an on-screen guide, an automated telephone system, or through a live customer service representative. Events often include feature films, sporting events and entertainment.
According to a report in CNBC, nearly 70 percent of the money in the case of the Mayweather-Pacquiao fight came from fans shelling out for a pay-per-view of the bout. “Pay-per-view purchases will account for the biggest piece of the estimated sales,” reported CNBC. “With a suggested price of about $90, and the potential for 3 million or more buys, pay-per-view could generate $300 million.”
Based on a different report from the New York Times, ticket sales make up another $70 million, with international broadcasts rounding out the rest of the purse.
Boxing (or combat sports in general) don’t follow the standard setups for seasons, playoffs, or tournaments like other popular sports in the world.
Big-name fights are sporadic and relatively rare in comparison to a monthly subscription service doesn’t make sense for service providers and their customers – boxing fans.
As an example, there were only 6 PPV boxing matches and 1 PPV MMA fight in 2018 (split between HBO, Showtime, BT Sports, Sky Box Office), whereas EACH team in Major League Baseball in the U.S. plays 162 games a year and there are 30 teams in the league.
These one-time events create a challenge for service providers to make money with standard service, so the PPV model makes a tremendous amount of sense. Especially when HBO can sell upwards of 1 million $50 buys for a single event (approximately 1% of their total revenue of 5.9 billion in 2016) and still charge people for a monthly subscription.
In addition, the time slots of boxing can vary as well, making it hard to fit into prime-time slots on network television.
Most sports grew up with the network television providers, so they naturally grew into the preferred time slots, e.g., Baseball in the U.S. and football (soccer) in Europe. Boxing can take place anywhere around the world, so the time slot is determined by location, not network preference.
Today ESPN, Fox and some online streaming services like DAZN are starting to air MMA and take some viewers away from traditional PPV services.
Boxing remains mostly on the standard PPV channels, which is causing some to think PPV is killing the sport.
Revenue #2 Description - Live Venues
Revenue #3 Description - Gaming
Despite slow traction in western markeOnline Gambling Statistics World gambling statistics show that around 26% of the population gamble. That means around 1.6 billion people worldwide gamble and 4.2 billion gamble at least once every year. When it comes to online gambling and demographic statistics, a UK study concludes that 17% of the population gamble online, resulting in £5.3 billion revenue for the online market alone.
In the US the numbers are quite different, in 2016 only 3% out of the 4.2 billion who said they gamble regularly said they played online. This number must have gone up in the following years however, as the revenue in 2018 landed on $306.5 billion for the US online gambling market.
When it comes to gambling on an individual scale, Aussies' currently lead the way. In 2014, Australians gambled over $916 per person, with Singaporeans coming a close second on $891.16. Singapore only recently legalized casino gambling, and the per-head spend isn't a surprise.
Despite being the home of Las Vegas, Americans are a distant third on $505.44 per capita, with Ireland and its liberal approach to gambling next on $490.39. The UK, with legal land-based and online gambling, and boasting one of the world's premier licensing jurisdictions, sits way back on $377.83. The gambling industry continues to prove that it's one of the most vibrant entertainment economies in the world.
Another interesting top 10 member is Malta. The small Mediterranean island boasts a small population but one of the largest per-capita losses anywhere in the world. Malta is a leading gaming jurisdiction that is home to many of the world's biggest online gambling sites and affiliates. https://www.mordorintelligence.com/industry-reports/online-gambling-market
Global online gambling market is projected to grow at a CAGR of 8.77%, during the forecast period (2019 - 2024).
The online betting is the fastest growing segment during the forecast period. Artificial intelligence, Chabot, and machine learning have taken over the market. The rise in the number of female population in casinos and convenience of cashless mode of payment during the gaming are likely to boost the online gambling market, during the forecast period.
Online gambling companies are likely to expand their sport betting options after sport betting was legalized in the United States by the Supreme Court, in 2018, which is further supporting the market’s growth. However, stringent regulations related to online gambling are expected to hinder the market growth rate.
The global online gambling market size was valued at USD 48.52 billion in 2018 and is expected to register a CAGR of 11.5% from 2019 to 2025. The high internet penetration and increasing use of mobile phones among individuals for playing online games from their homes and public places are driving the market demand. In addition, factors such as easy access to online gambling, legalization & cultural approval, corporate sponsorships, and celebrity endorsements are also contributing to the market growth. The growing availability of cost-effective mobile applications across the globe is further expected to fuel market growth.
The internet has become a global platform for communication and enables merchants to offer their services in the digital market space. Trends also suggest that the consumption of services in the global virtual market has increased by 28 percent annually since the last decade. With the growing use of the internet, the growth rate of online casinos has increased significantly. The growing awareness of latest technologies and increasing disposable income of individuals are expected to propel the market growth.
Boxing Promoters in the US industry trends (2014-2019)
The Boxing Promoters industry has been growing steadily over the five years to 2019. IBISWorld estimates that industry revenue has grown at an annualized rate of 4.6% to $361.5 million over the five years to 2019. This growth has largely been the result of continual increases in consumer spending during the period. Furthermore, the four highest-grossing fights in boxing history took place during this period, renewing interest in the sport itself and expanding revenue overall. In 2019, industry revenue is anticipated to increase 0.4%. This has contributed to overall growth in industry profit over the five years to 2019 as well.
Revenue #4 Description - Merchandising
Sports merchandise licensing is a method used to curb the manufacturing of counterfeit products of sports teams and sports merchandise brands. Licensing reduces infringements on the trademarks of teams and players to a great extent. As of 2018, sports goods merchandising accounts for nearly 10% of the global sports industry. According to Netscribes, the global licensed sports merchandise market is expected to reach a revenue of USD 33.99 Bn by 2023, from USD 26.47 Bn in 2018, expanding at a compound annual growth rate (CAGR) of 5.1%.The market is classified into three segments - based on products (apparel, footwear, accessories, and others), distribution channels (online distribution and offline distribution), and end users (men, women, and children).
The global licensed sports merchandise market is chiefly driven by innovation and development of more attractive and stylish sports apparel, sports accessories, and other product varieties. The market is also significantly influenced by the improved economic conditions across developing economies such as India and China, owing to which, sports lovers are spending lavishly on licensed sports merchandise.
With growing consumer base and huge market potential, the global licensed sports merchandise market is expected to witness considerable growth in the next few years. Transparency Market Research estimates that the market, which valued at US$27.63 bn in 2015, will reach US$48.17 bn by 2024, expanding at a CAGR of 6.4% from 2016 to 2024
Revenue #5 Description - Streaming
Over the past 5-10 years, live streaming has revolutionized the way content-creators interact with their audiences. Widespread access to live streaming platforms makes it simple for anyone to immediately and meaningfully connect with their users. For years, Cable TV news programs, HBO boxing matches and evening baseball games reached viewers this way. Now, this immediacy creates many opportunities for anyone, you included, to evolve their product, and explore new business models. One way to aggregate your core audience and monetize your content is to implement pay-per-view with your live streams. PPV streaming generates revenue for your streaming venture or business, identifies who is tuning in and surfaces the content that registers most with your core audience.
There are many things to consider when transitioning from free to monetized streaming models, like pay-per-view, but don’t be overwhelmed! Before anything else, determine if you have, or expect to have, an audience that would pay to engage with the specific content they’re interested in. After all, you need to believe that you are offering a valuable experience worth monetizing!!
Once you’re ready to explore your options, hammer out the finer details. What platform should you host your content on? What kind of packages should you offer? How can you ensure the content reaches your audience? We’re here to help.
You may still be trying to better understand how PPV live streaming works, the benefits of PPV or whether it’s a good fit for your organization’s content. In that case, read on for a few important points about pay-per-view live streaming you should know before diving in.
Pay-per-view isn’t the only way you can generate revenue with your live stream. Download this free guide to learn more about monetization options. Pay-per-view live streaming occurs when two conditions are present: There is an event or piece of content that a particular audience, usually unable to attend the event, is willing to pay a fee to access. There is a person or organization with the ability to stream the content, connecting the audience with the event in exchange for a small fee.
You hear a lot about cord-cutting these days, as cable-customers flee traditional payment systems and adopt out-of-the-box streaming options. It makes sense to take advantage of this trend and offer viewers itemized content packages. Pay-per-view streaming has a clear role in this new marketplace, and in fact, pay-per-view has always functioned as a disruptor to traditional payment systems.
Companies first experimented with pay-per-view as early as the 1950s, but it really gained traction when HBO applied the system to big, promoted events. The 1975 “Thriller in Manila” boxing match between Muhammad Ali and Joe Frazier was the first boxing match to use a pay-per-view model. Not all live-streamed content can rival one of the greatest bouts in history, but events like this created a new dynamic between provider and viewer.
After HBO’s success with pay-per-view, companies like ESPN and, eventually, WWE implemented the system as well. In fact, the domain payperview.com redirects to a WWE website. Pay-per-view streaming allowed these industries to provide viewers with the exact content they wanted. This shift occurred even before smartphones facilitated the boom of live-streaming and cord-cutting became ubiquitous. Now those things are true, and we believe the market is perfect for content creators looking to implement pay-per-view services.