The Bottom Line: Promoting Like There’s No Tomorrow
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When the Ultimate Fighting Championship attempted to shift from niche enterprise to mainstream sport through “The Ultimate Fighter” reality show in 2005, it faced a number of obstacles. One issue in particular limiting the upward potential of the sport was the financial model. Almost all mainstream sports put their biggest events on major networks, relying on those platforms to cultivate fan interest. Any non-fans interested in potentially getting into football, basketball, baseball or hockey can simply tune into a big event and see what they think.
MMA, by contrast, relied on something more similar to the boxing
model. Boxing was once one of the biggest American sports. Like
with today’s top sports, boxing fans could tune into network
television and watch Muhammad Ali fight on ABC. In the decades that
followed, boxing’s business model gradually changed. It turned to
subscription channels like HBO and Showtime, while putting its
biggest fights on pay-per-view. PPV offered the potential for
massive one-night windfalls while premium television could pay more
for the same number of viewers because those viewers were spending
more. Those outlets were tempting, but they came at a major
cost.
It was no accident that the popularity of boxing declined, as it relied increasingly on pay-per-view and premium cable. It’s much harder to create new fans when the best product is tucked away in an area that’s hard to reach. Moreover, new fans are less apt to invest in the sport when they know there’s a much higher cost associated with keeping up than there is for just about every other sport. The boxing financial model was highly profitable for the biggest fights in the short term, but over the long term it gradually diminished mainstream fan interest.
UFC from its very start relied on the pay-per-view model like boxing. It’s one of the biggest success stories in the history of the pay-per-view medium, generating substantial buy rates even when it did not have television to promote itself. It was always going to be hard for UFC to move away from pay-per-view even when it did secure television, because no television outlet would pay as much for the biggest single events as the UFC could take in from pay-per-view. There just weren’t enough viewers.
It might ultimately be wise for UFC to move away from pay-per-view. As you put bigger events on free television, you generate larger viewership and create new fans. Over time, you can generate bigger television rights fees as you grow your audience and you can then monetize that larger audience to a much greater extent than the smaller pay-per-view audience. The obvious problem is that you would be giving up massive amounts of money in the short term with no guarantees of long-term returns. Thus, even big gamblers were unwilling to take the risk, and the UFC remained a PPV-driven company.
While UFC did retain its pay-per-view identity even as it hit Spike TV, the company still consistently kept its eye on the big picture in a number of different ways. The number of shows was manageable so new fans could easily keep up with everything even if it was expensive. The UFC also regularly put top stars on live Spike TV. It ran Tito Ortiz-Ken Shamrock 3 on Spike at a time when they were two of the UFC’s best-known stars. Quinton Jackson took on Dan Henderson in a title unification fight on Spike immediately after knocking out Chuck Liddell. The UFC on many occasions eschewed short-term profits for long-term sport-building moves. This paid off handsomely, as MMA exhibited explosive growth for a number of years.
Over time, the UFC gravitated away from the emphasis on accessibility that facilitated rapid growth. Instead, the company prioritized monetization. It ran more shows, so it became harder for fans to keep up. It ran more pay-per-views, so it cost more to follow. It continued to run those shows even as the buy rates steadily declined, which had a doubly negative effect. For one, it meant the profits were far less than just putting those shows on a more accessible platform. Perhaps more importantly, it meant putting many of the company’s aspiring superstars in front of much smaller audiences, making it much harder to turn them into drawing cards for the future no matter how good they looked.
There was a fortuitous development in recent years, as television-rights fees for even secondary sports continued to explode. This offered major MMA companies the opportunity to move more of their product to larger platforms without even taking a financial hit. It was the very definition of a win-win outcome. It simply meant taking smaller profit increases in the short term in order to lead to greater long-term growth. Rather than doing that and following the strategy that led the sport to its strongest growth, the sport’s decision makers instead doubled down on the newer strategy of forgetting about tomorrow.
Before, the biggest events were largely on pay-per-view, but at least the other events were easily accessible to the average sports fan. Now, easy-to-find events that don’t cost fans extra money to watch are the distinct minority. On ESPN, only 10 of the UFC’s announced 42 cards will be on regular television. Twenty will be on the monthly subscription service ESPN+, with another 12 on pay-per-view. Presumably, there will be additional cards on the UFC Fight Pass subscription service. Bellator MMA then opted into the same game, dividing its annual cards into seven major events on the DAZN pay service, eight major events on both Paramount and DAZN and seven minor events on both Paramount and DAZN.
Prices for other sports’ all-access packages vary depending on the provider and the exact package in question, but MLB Extra Innings is in the vicinity of $170, with NBA League Pass running around $200 and NFL Sunday Ticket around $300. By contrast, the cost of UFC pay-per-views, Fight Pass, ESPN+ and DAZN is likely to run you over $1,000 annually. Worse, the “free” option for casual MMA fans gives them so little of the good stuff it’s hard to imagine they’ll even bother, while other sports allow casual fans to watch pretty much all of their local team’s games on network television or basic cable.
The issue here isn’t a moral one; it’s a strategic one. It’s just not savvy to tuck away such a massive portion of your product in expensive, hard-to-reach spots. It makes it exceedingly hard to create new fans that are the lifeblood of your product. You become reliant on monetizing a smaller group of people more and more -- an unhealthy long-term setup. That was always a problem for MMA, but the problem has been exacerbated to an extraordinary extent in just a matter of months.
For now, UFC President Dana White and Bellator President Scott Coker can celebrate guaranteed big-money television deals. Their successors are unlikely to look back on this period with nearly so much enthusiasm. MMA’s current power brokers have created a distribution model that deters new fans from getting into the sport while forcing current fans to spend more and more money to keep up. That’s no way of preparing for tomorrow, but then again, it’s hard to tell if they even recognize tomorrow is coming anymore.
Todd Martin has written about mixed martial arts since 2002 for a variety of outlets, including CBSSports.com, SI.com, ESPN.com, the Los Angeles Times, MMApayout.com, Fight Magazine and Fighting Spirit Magazine. He has appeared on a number of radio stations, including ESPN affiliates in New York and Washington, D.C., and HDNet’s “Inside MMA” television show. In addition to his work at Sherdog.com, he does a weekly podcast with Wade Keller at PWTorch.com and blogs regularly at LaTimes.com. Todd received his BA from Vassar College in 2003 and JD from UCLA School of Law in 2007 and is a licensed attorney. He has covered UFC, Pride, Bellator, Affliction, IFL, WFA, Strikeforce, WEC and K-1 live events. He believes deeply in the power of MMA to heal the world and bring happiness to all of its people.
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