Pay-Per-View
Long regarded as one of the highest margin products in cable, MSO's and Internet broadcasters could enjoy significant gains from employing a “price-discrimination” strategy.
Pay-Per-View Pricing Analysis
Pay-per-view events, in the industry in general, appear haphazardly priced. Traditionally, a single-part price is set. Prices should reflect intensity of customer demand. Thus, the more fully variation in demand can be exploited, the more profit will be generated. A strategy that uses price discrimination maximizes revenue. For example, single price benchmarked prices should be irrelevant, as the cost of selling another PPV unit is approximately zero, being largely a billing cost. Therefore, there is more headroom to discount to attract customers
Two categories naturally reveal themselves though analyysis:
• Current customers who have previously purchased. Willing to pay a mean maximum price greater than retail for Pay Per View products, and
• Non-Customers, who have indicated a preference for Pay-Per-View at a lower mean price.