The aftermath of UFC 168 was all about Anderson Silva’s broken leg, the snap heard around the MMA world. Prior to the unfortunate finish of his highly anticipated rematch with Chris Weidman (still UFC Middleweight champion), the rest of the card had lived up to the hype. Ronda Rousey and Miesha Tate put on one of the most exciting women’s MMA fights ever, while Travis Browne cemented his status as a contender in the heavyweight division with a vicious barrage of elbows straight to the head of former UFC Heavyweight champion Josh Barnett. In the midst of all the excitement, an interesting announcement has gone somewhat under the radar. Dana White (UFC President), Lorenzo Fertitta (UFC CEO) and Marshall Zelaznik (Chief Content Officer) held a surprise press conference prior to the preliminary bouts Saturday afternoon in Vegas. There were no star signings to be announced, no changes to the UFC 168 fight card, and no new scheduled bouts. Instead, they announced the debut of a program named ‘UFC Fight Pass’, an online video streaming service that, as Lorenzo Fertitta boiled it down to, will be ‘Netflix for fight fans’.
For 9.99$ a month, subscribers will get access to the largest library of MMA fights ever assembled. 3000 UFC fights, 500 PRIDE fights, 600 WEC fights, 500 Strikeforce fights, and fights from other now-defunct promotions such as Affliction and EliteXC. In short, subscribers will gain access to more fights than any reasonable person would ever have time to watch. While this is all excellent news for the fans, especially the new ones who have two decades of history to catch up on, did it really warrant its own press conference to interrupt the lead-in to the biggest card of the year? Actually, yes it did, but not for the aforementioned reasons.
In addition to a massive library of MMA matches, subscribers will also get access to over 150 live bouts that will air exclusively online to UFC Fight Pass subscribers, starting with UFC Fight Night 34: Saffiedine vs Lim on January 4th, 2014. These online-only Fight Night cards will most likely be filling the gap between the 46 events planned for 2014, up from 33 that were successfully produced in 2013. In addition, subscribers get access to all of the international editions of The Ultimate Fighter, the organization’s successful reality show, and access to exclusive original programming that promised to give fans more inside access to the fighters and the promotion than any other sports league or team.
The website and infrastructure that hosts the content was built in partnership with Neulion, an online video technology company that the UFC has worked with in the past, who can tout organizations like the NHL, NFL, NBA and ESPN as former and current clients. The service went live as the press conference happened, and the first 2 months are being offered for the low, low price of free. Monthly billing will start in March and can be cancelled at any time. UFC Fight Pass will initially be available to fans in the United States, Canada, New Zealand, and Australia, but management made it clear that their intentions are to have the service up and running in as many countries as possible in due time.
The presentation made it sound almost too good to be true, and it didn’t take long for people to start looking for the catch. As some irritated fans have already pointed out, the debut live event on Fight Pass, UFC Fight Night 34, was scheduled to air at 6:30am EST in the UFC’s base of North America. The card has already been labeled as one of the weakest the UFC has ever put together, comprised mostly of names that no one in the North American market has ever heard of. However, if you watch the way Lorenzo Fertitta opened the press conference, you would know this isn’t the result of bad planning or a botched launch. Fight Night 34 was held in Singapore, the first time the UFC produces an event in Southeast Asia, and took place during Singapore’s primetime block, not North America’s. The fighters on the card, while relatively unknown to North American fans, all have a degree of drawing power in the Asian market. A card that is, to North American eyes, a stinker was expected to be considered a huge draw to MMA fans in Asia. This strategy of catering to individual markets is one that the UFC appears to be banking on. Fertitta spoke of the difficulties in serving markets where they knew high demand existed, while simultaneously tending to the needs of their core customers. This is a classic problem for any entrepreneurial endeavour that decides to expand beyond their target market, and UFC Fight Pass is the solution that they’ve created for that problem.
Fight Pass will not stream events in regions where television networks already own the rights. For example, all of the UFC events that Fox purchased a little over 2 years ago in a 700$ million dollar deal will be streaming on Fight Pass, but not to anyone in the United States. Likewise, The Ultimate Fighter: Brazil, which features company stars Chael Sonnen and Wanderlei Silva as the opposing coaches, will be available to stream on Fight Pass everywhere outside of Brazil, but not to subscribers within the country. This way the UFC can continue to benefit from and acquire new revenue streams in deals with network television stations while supplementing that profit with extra income from subscribers outside those countries. This system uses the sport of MMA’s main advantage against its American counterparts such as Basketball and Football as they try to expand internationally; fighting is ubiquitous and understood everywhere on the planet. The rules of football are not intuitive, but putting two mixed martial artists in a ring needs very little explanation or context.
During the press conference there were allusions to the changing ways that we as a society are consuming our media. The Fight Pass creates a digital distribution network that, much like the pay-per-view model, gives the UFC complete autonomy over what and how they want to produce and distribute their content. For now, they can use it to simply supplement their pay-per-view and TV revenue. However, it’s entirely possible that this is only the first step towards embracing digital distribution. The amount of PPV’s sold have been in a steady decline year after year since 2010, when they peaked at 8,805,000. In 2012, only 5,835,000 events were sold, and 2013 put up similar numbers. Most believe the problem to be a combination of retiring stars and oversaturation, with the increase in free televised events cannibalizing the PPV market.
Barring any shift in momentum, it’s easy to see a situation where the UFC would stand to profit more by raising the price of the Fight Pass subscription and running a few big events per year through it instead of PPV. If I had decided one year ago to watch every UFC event of 2013, in HD, I would have paid 715$. Now, if I throw in a Fight Pass subscription that figure jumps to 835$. That is an unreasonable barrier to entry that prevents casual fans from becoming diehard fans, and sports live and breathe with revenue from diehard fans. If the UFC decided to run 4-6 stacked cards a year, with the rest being offered on Fight Pass at twice the current subscription rate of 9.99$, 19.99$, I would be paying $480 – $590 a year. That’s roughly 58% – 71% of the going rate, and it would be a much easier pill to swallow.
In short, the Fight Pass gives the UFC an additional source of income, an edge on their competition as they try and become a truly global brand, and, as they grow and refine their digital distribution network, a whole new world of pricing schemes that can loosen their absolute reliance on the pay-per-view model. All in all, it seems like a very good move. Whether the company brass has all of these possibilities in mind is open to speculation, but judging from the tone of the press conference, it seems safe to say that they’re very aware of the possibilities. As fans, all we can do is wait to see where they take us. For now, I’ll be enjoying two months of free fights.
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