You will be redirected back to your article in seconds

PPV growth potential downgraded

Report labels pay-per-view a placeholder for VOD

The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research.

Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of homes with access to digital pay-per-view and near-video-on-demand services.

Adams found that PPV movies generated $342 million last year in revenue for the studios. While that was a healthy 36% climb on an expansion of NVOD subscribers to 14.4 million homes, Adams and other analysts originally projected $600 million in total PPV revenue for the year.

And contrary to industry estimates of 5 million digital-cable homes by the end of 1999, Adams said that just 3.2 million homes had digital cable systems offering at least 12 channels of NVOD movies last year.

Adams said in a recent report that he now considers NVOD a placeholder for video-on-demand that won’t generate robust revenue until consumers can truly order any movie they want whenever they want. NVOD is simply an expanded number of PPV channels that allow for an increased number of start times of the same movie .

Adams also projects co-existence between homevideo and PPV, noting that video rental revenue and NVOD both increased last year. Video rental revenue grew 6.3% to $10.1 billion.

Adams traced the inflated estimates of the PPV industry to two key errors by analysts, including himself:

First, analysts have previously done very little original research on buy-rates, relying instead on faulty assumptions.

To get a better handle on the PPV industry, Adams surveyed all the studios. He found that buy-rates (monthly PPV movie purchases divided by the number of homes) on traditional analog (non-digital) PPV systems have dropped by half since the introduction of digital satellite systems to just 11% (slightly more than one purchase per year). Many of the best traditional cable customers have defected to direct broadcast satellite services or digital cable systems with NVOD, Adams said.

Second, Adams said analysts had projected a buy-rate of nearly 200% (nearly two PPV movie purchases per month) for the entire satellite industry, based on reported claims in that range by DirecTV. But even if DirecTV’s reported numbers were accurate, DirecTV represented only about half of all satellite subscribers until the company acquired its former competitor Primestar last year.

Adams determined that DirecTV’s buy-rate last year was 160%, EchoStar’s DISH Network was 55%, and Primestar was 25%, leading to an overall 1999 buy-rate among all satellite subscribers of just 85%.

Adams believes PPV buy-rates won’t dramatically improve until cable begins to roll out true video-on-demand. He cited tests indicating consumers will buy three to four movies per month (a 300% plus buy-rate) on a VOD basis.

More TV

  • Cindy HollandNetflix Executive Address, TCA Summer

    TV News Roundup: Netflix VP Cindy Holland Among Three to Join TV Academy Board of Directors

    The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research. Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of […]

  • Songs for Screens Powered by Mac

    Songs for Screens: 'Insecure' Music Supervisor on Why City Girls Are 'The SZA of This Season'

    The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research. Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of […]

  • Simon Cowell Walk of Fame

    Simon Cowell to Be Honored With Star on the Hollywood Walk of Fame

    The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research. Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of […]

  • SATURDAY NIGHT LIVE -- Episode 1738

    Featured Player Luke Null Expected to Leave 'Saturday Night Live'

    The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research. Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of […]

  • Designing Women

    The Diminishing Returns of TV Reboots and Revivals (Column)

    The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research. Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of […]

  • Actor Luke Mitchell attends the premiere

    'Blindspot' Alum Luke Mitchell to Lead CBS Drama 'The Code'

    The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research. Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of […]

  • Jason Lewis and David Janollari8th Annual

    David Janollari Extends Overall Deal With Universal Television

    The pay-per-view movie industry may be only half as big as originally thought, according to new revised industry estimates by Adams Media Research. Industry analyst Tom Adams has dramatically downgraded the sector’s growth potential after his new calculations indicated that last year’s total pay-per-view revenue fell far short of projections, despite an accelerating number of […]

More From Our Brands

Access exclusive content