Pay-Per-View Starts Perking

By Richard Zoglin

The collection of talent was impressive, if not quite a match for the hyperbolic title: Frank, Liza & Sammy: The Ultimate Event! Still, when Frank Sinatra, Liza Minnelli and Sammy Davis Jr. commanded the stage two weeks ago for a 90-minute TV concert, they were doing more than just a routine network special. The concert was the latest offering in a busy new realm of video mega-events: pay-per-view television.

Pay-per-view is hardly the ultimate in TV technology, but it may be an idea whose time has finally come. Conventional pay-cable channels, like HBO and Showtime, offer viewers a smorgasbord of programming for one monthly fee. Pay- per-view instead gives viewers a chance to select from a menu, paying only for the programs they want to see. Prices typically range from $4 or $5 for recent movies to $15 or $20 for concerts and sport events. Pay-per-view is still a pint-size player in the TV marketplace: only 11 million TV homes (out of 90.4 million) currently receive PPV shows, according to Paul Kagan Associates, a media research firm. But revenues are growing fast (from $88 million in 1987 to $200 million last year), and the number of PPV homes, Kagan forecasts, will nearly double by 1992.

The two largest PPV companies, Viewer's Choice (which reaches 5 million homes) and Request Television (more than 4 million), each offer customers a monthly program slate filled largely with movies. But the business's new boomlet has been propelled mainly by special events. Last June's heavyweight title fight between Mike Tyson and Michael Spinks was sold to nearly 600,000 TV homes on a pay-per-view basis at an average $35 a crack. Wrestling matches have proved an even bigger draw. Wrestlemania IV had a reported 900,000 takers last March (the largest audience yet claimed for a PPV event), and well-hyped ring battles like last week's Chi-Town Rumble '89 are coming almost monthly. Robbie Knievel, son of daredevil Evel, will attempt a motorcycle jump over the fountains at Las Vegas' Caesars Palace for a PPV event in April, and the supermiddleweight title fight between Sugar Ray Leonard and Thomas Hearns will be offered over PPV in June.

Pay-per-view has had its share of duds. A Dirty Dancing concert last November drew fewer than 80,000 subscribers. Viewership for the Sinatra- Minnelli-Davis concert is still being tabulated, but will probably fall well short of 100,000. Still, the concert's packager, Showtime Event Television, is pursuing other big stars for PPV events, and industry executives are bullish. "We're building an electronic arena," says Jeffrey Reiss, chairman of Request Television. "The day will come when Bruce Springsteen will be playing pay-per-view at the end of his tour. We're betting on the future."

The future may come sooner than expected because of the 1992 Summer Olympics. Along with the 150-plus hours of over-the-air coverage it will provide, NBC has announced plans to offer separate packages of events for PPV. The prospect of large revenues from the Olympics is likely to spur more cable systems to acquire PPV technology before then.

The slow spread of that technology has been a major stumbling block to PPV. A cable system must first have "addressability" -- the ability to direct a program only to the homes that have requested it. Then it must have an efficient method for taking orders. The crudest PPV setups use live phone operators, a system that cannot handle a flood of last-minute orders. More sophisticated methods use an automated toll-free phone number. Most advanced of all is a system (currently in 1 million PPV homes) in which viewers can place orders by simply pressing buttons on their cable remote-control device. "It's very clear that cable systems that have simplified the order-entry process see increases in buy rates," says Larry Gerbrandt, senior analyst for Kagan.

The advent of pay-per-view has thrown a scare into the prospering home-video industry. If movies are released on PPV and cassette at the same time, home- video executives fear, viewers might opt for the convenience of punching buttons at home rather than trek to the neighborhood video store. One study has shown that video rentals dropped as much as 50% for films that had heavy play first on PPV. Under pressure from the home-video industry, the major Hollywood studios now delay the release of most movies to PPV until 30 days or more after their arrival in video stores. (The pay-cable release generally comes about six months later.)

But PPV's eventual place in the video universe is still uncertain. Cable and videocassettes are already eating up a sizable portion of viewers' home- entertainment dollars. Will pay-per-view induce them to shell out even more? And if so, will it cut into the revenues of -- and maybe even supplant -- other TV choices? For the TV industry, that is the ultimate question.

With reporting by William Tynan/New York