The Hamilton Ave Journal 01.05.08: Volume 1 – Issue 15

And where is Hamilton Ave? That is the location of the WWE Production Studio in Stamford, CT, and thus the most powerful place in the wrestling world. Besides, The East Main Street Journal just does not have the right ring to it.

Who am I? I am JP Prag: consultant, entrepreneur, businessman, journalist, and wrestling fan.

Now, ring the bell because the market is open.

LEAD STORY: The Buyrates are in

The Wrestling Observer has released a list of PPV buyrates for TNA for the past year. Although no source was given, the numbers seem reasonable compared to what is known internally with TNA. And as noted yesterday in MeeThinks Friday FreeThinks, the Journal intends to delve deeper than just he base numbers.

Of course, this is a large concern over the overall dropping numbers. More interesting, though, is the overall conversion rate. That is, how many of TNA’s viewers are turned into PPV buyers. There has been a great emphasis in TNA to improve television ratings and they have done so in the past year. The year began with an inter-PPV (the time between one PPV to the next) ratings average of 0.87, peaked at 1.10 in July/August, and settled at 1.03 in October/November. Overall—although off their peak—TNA has improved iMPACT’s rating by over 18% and had reached at high as 27%.

That said, how much of that additional audience became PPV buyers? The answer, according to the chart below, is none:

This chart shows TNA’s average inter-PPV rating versus the conversion rate (number of PPV buys per total audience). As can be seen, the conversion rate has dropped even as ratings increased. What is an issue now, though, is that ratings actually show a slight decline. Though there has been some additional growth in the conversion rate, it is still half of the known potential and a point and a half below the secondary peak set in February/March.

So now it looks as if there is a mid-tier audience that has been put in place that will order the PPVs (2.5% of the audience) and a slightly normative audience that will watch no matter what (approximately 0.9-1.1 million). The issue is that neither metric is growing. TNA may be able to bring in more audience members, but they are not converting them into PPV buyers, which is the major difference.

On an average basis, it costs more to gain a customer than it does to keep an existing one. So if it costs $1 to keep an existing audience member, it may cost TNA $3 to get a new customer. And how are they supposed to gain back that cost for the new audience member? They do not get additional revenue from Spike and have a set-deal contract with how much they are being paid for their show. There may be goal targets that will get them more dollars for additional ratings points, but the Journal believes nobody has done a managerial accounting cost analysis to see if the additional gain in revenue will offset the cost of gaining new audience members.

That said, TNA may benefit from concentrating on their existing audience and turn them into PPV buyers. If it costs $1 to keep an audience member, and another dollar to convert them to PPV buyers, that is $35 in additional revenue (50% of which goes to the PPV company) minus $2 for the audience member. That is a direct correlation that can be tracked.

TNA needs to do a much better analysis of revenue versus cost for audience and use that as the basis for the strategy and booking in 2008.

The NWA is back in town

In a surprise turn of events, the NWA announced on Thursday that it would launch a new television program on the Dish Network starting January 16, 2008. Although the Dish Network is only available in 13 million households, this is a step in a different direction for the NWA. Since breaking ties with TNA, the NWA has had no national outlet in order to promote its champions and network of syndicates.

The show will be taped monthly in Las Vegas and appears to be run by the NWA Board itself and not any of the affiliates. This is a vastly different strategy in the past where the NWA Board always acted as a final decision for titles and let member organizations operate as they pleased. John Stuart Productions in the media partner who will be producing and designing the show.

What is more interesting is that many TNA contracted employees also work for NWA member territories and hold titles with the organization. The Amazing Kong was specifically listed among those who would appear as she is the NWA Women’s Champion.

When ROH announced that it would begin offering PPVs, TNA immediately pulled all contracted talents from their shows. The Journal imagines that the same will happen here. Of course the NWA is a much wider network of affiliates, and not allowing TNA contracted wrestlers to work for any NWA member will severely limit their working options. It may comes to a point where NWA members may have to choose between staying with the NWA and hope to get advertising through their program or leave the NWA in favor of having a working relationship with TNA.

The fallout of this decision will be interesting to watch in the coming months.

RAW goes HD

Although no official announcement has been made, RAW appears to be switching over to HD on January 28, 2008. This is the night after the Royal Rumble, which will also play in HD for an additional $10. The USA Network began broadcasting completely in HD simulcast starting January 1, 2008 with many of its shows following suit. The CW is expected next later this year followed by the rest of NBC/Universal, including the SciFi Network that is home to ECW.

As with stocks, here in the Journal we track the progress of television ratings. If ratings are the barometer by which we judge the product, then over the course of 52 weeks we should be able to see patterns, trends, and anomalies. Please note that gaps in the chart below are due to data not being released/available.

For the week ending Thursday January 3, 2008, here are the current standings of our shows:

RAW
Close (This Week’s Rating): 2.6
Open (Last Week’s Rating): 2.5
Percentage Change: ▲ 4.0%
52-Week High: 4.3
52-Week Low: 2.5
All Time High: 8.1
All Time Low: 1.8

SmackDown!*
Close (This Week’s Rating): 2.5
Open (Last Week’s Rating): 2.9
Percentage Change: ▼ 13.8%
52-Week High: 3.3
52-Week Low: 2.2
All Time High: 5.8
All Time Low: 1.0

What are the top ten selling items for the WWE? From WWEShopZone.com:

1. WWE Best of Raw 15th Anniversary DVD
2. Triple H The Conqueror T-shirt
3. Hardy Purple Logo Pendant
4. WWE Greatest Hits – The Music CD
5. WWE Best of Raw 15th Anniversary DVD & CD T-Shirt Package
6. Triple H Grey Skull T-shirt
7. WWE Black Gift Bag
8. Chris Jericho Y2J T-shirt
9. Hardys Mirror T-shirt
10. Stone Cold Steve Austin Jakks Exclusive Action Figure

As John Cena, Shawn Michaels, and World Class Championship Wrestling leave the top ten, the Hardys take two of their spots coming in third and ninth. This has to be seen as a direct correlation with Jeff Hardy’s recent push to the main event picture. Hopefully, the WWE will look at Hardy’s recent sales and realize that a continual push will be good for their top line and general future. Still, this would not be the first time the WWE has ignored sales to stay with the status quo as RVD, Chris Jericho, Matt Hardy v1, Booker T, and several others come to mind in their various peaks in the past.

TNA requires a little bit more research. Their website does not release Top Ten lists, so the Journal does a general search for a space on “featured products” and sorts by most popular. They came up in order as:

1. TNA Meltdown CD Vol. 2
2. The History of TNA: Year 1 DVD
3. TNA Fleece Jacket
4. NEW TNA Hoodie
5. TNA Bound for Glory 2007 DVD
6. TNA Fleece Blanket (B)
7. 2008 Wall Calendar
8. Long Sleeve TNA Logo T-shirt (Navy)
9. Long Sleeve TNA Logo T-shirt (Charcoal)
10. Booker T T-shirt

As with the WWE, TNA’s music CD has also returned to the charts. One wonders why music is so popular this week, but it may not last. Also, Christian Cage’s DVD has left the list, but that may only be because it is no longer a featured product. It would be odd for the DVD to go from number two to not on the list at all. As notes last week in the Journal, though, is Booker T’s T-shirt has broken in to the top ten. For several weeks it has been sitting at number eleven but it looks like Booker T is finally moving up the list and making his salary.

Do you know a wrestling event coming up? Send one in to The Hamilton Ave Journal and we’ll be sure to add it to the list.

No critical pieces were written this week, so worth your read instead is: