2014 will be a big year for wrestling and MMA fans, as the market leaders in each field look to launch brand new content delivery networks.
For WWE, the Network is a long time coming. First promised to be launching in 2012, the subscription TV channel is expected to launch in February and may feature this year’s WrestleMania spectacular as a key selling point. It is expected that the 11 other WWE PPVs will also be available to subscribers at no extra charge, meaning that what is in theory the highest quality product the WWE puts out will be available for the low low price of $10-15 a month. With exclusive content, archive footage and those live headline events, the WWE Network offers a lot of content for that money, and will seek to eliminate a section of the WWE fan base who pick and choose which pay-per-views to order. If you are the sort of person who only orders WrestleMania, and statistics show those people do exist, the Network means that WWE will double their annual income from those people. The WWE has ended their existing On Demand service in favor of the programmed channel.
While not a TV service, the UFC is also putting together a lot of content for their digital network. While the UFC’s new content delivery platform hasn’t been as long heralded, it is a significant part of their business expansion headed into 2014. With plans to get close to 50 live events across the globe next year, the UFC needs a way to get these live fights to the hardcore fans who will wake up at 6:30am to watch Tarec Saffiedine fight in Singapore without relying on them finding their way to Fox Sports 2. Rather than being a 24/7 channel, the UFC appears to be building on the existing UFC.tv On Demand offering by building in live fight cards from across the world at odd times, international seasons of The Ultimate Fighter and other live events. If kept at a low enough price point, this mix of exclusive live events and on demand archive content could prove a winner with the hardcore fan base. The UFC is undoubtedly putting less at stake with this venture than WWE; A shows will still be on pay-per-view, and B shows will still be on FOX Sports. The shows that will be on this network are not shows that are hugely important for the UFC to get TV viewers to watch, with the focus on developing local audiences in these new expansion markets like Asia and new parts of Europe. With the announcement this week that these fight cards will air on delay on US television, this network is simply a way of delivering those live fights to the hardcore fans as they happen. The lure and luster of live sport is still alive and well for many, and the UFC is very aware of needing to satisfy that appetite.
While these services may appeal greatly to hardcore fans, the paid content model may well be one on the decline.
The closest competitors to the WWE and UFC respectively are TNA and Bellator, and both have experienced great pay per view-related hardship this year. For TNA, a reduction to four PPVs from twelve a year was originally praised as sensible, but the reduction in quantity has had little impact on overall PPV quality and buyrates have not improved. Bound For Glory, the biggest show of the year, attracted an estimated 17,000 buys – around 2% of the average audience for TNA’s weekly TV show. TNA’s Spike TV compatriot Bellator MMA attempted to put on their first pay per view offering just last month, but were not confident enough to put their own top fighters in the headline position. Instead, Bellator opted for former UFC champions Tito Ortiz and Rampage Jackson to face off in a battle of extended losing streaks. When Ortiz succumbed to injuries and that bout was scrapped, Bellator got cold feet about the PPV experiment and moved the show to Spike TV instead. Instead of tens of thousands watching Bellator 106 on PPV, the show drew 1.1m on network television.
It’s certainly not all roses in the pay per view divisions of the big two either. UFC Fight for the Troops 3, a reasonably weak card shown on Fox Sports 1 of a Saturday evening attracted 641,000 viewers, while UFC 166 featuring the trilogy fight between heavyweight champion Cain Velasquez and top contender Junior Dos Santos attracted just 330,000 buys, the lowest of Velasquez’s tenure as a headliner. While this represents a much better conversion rate, and PPVs featuring those named St Pierre or Silva will outperform the lower rated TV cards, PPV buyrates outside of the top two drawing stars are on the decline. With both GSP and Anderson Silva due for retirement sooner rather than later, that would leave Velasquez and light heavyweight champion Jon Jones as the two stars to do the heavy buyrate lifting – and Jones only attracted 325,000 buys for his fight against Alex Gustafsson in July.
PPV buyrates for WWE fail to set the heather alight either, with most shows failing to get much above 300,000 buys apart from the two biggest attractions of the year, Wrestlemania and the Royal Rumble. If those buyrates take a big hit with people opting for the Network instead, they will need to attract a lot of people to the Network who aren’t buying any pay per views at all in order to make the reduction in monthly asking price viable. For WWE, the vast majority of the income from their content comes from TV rights fees. WWE are hoping to triple or even quadruple their rights fees when they come due in 2014, so perhaps they are prepared to take a hit on the pay per view buy rates to get more eyes on the product while more than making up for the lost income in rights fees.
So, are pay per views about to disappear? Probably not. In both the case of the UFC and WWE they will remain as the gold standard of events, and the UFC is not looking at any other way to offer those events domestically other than individual pay per view purchases. However, for shows which don’t live up to that gold standard, or for shows by those competitors who simply can’t offer what the market leaders can, maybe it is time to explore other methods of content delivery to achieve success, as history is showing us that fans will not pay for a product they don’t think is worth their time. If the price points stay low, subscription networks may work for the WWE and UFC. Rather than asking consumers to purchase a single event which they will make a cost/value evaluation on, fans buy into having a wealth of content beamed at them which includes these lower level events. Instead of paying $50 for a sub standard WWE PPV, $15 a month gets you that event plus a host of original programming and archive access.
As far as UFC are concerned, this is a relatively hassle-free solution to one of the real issues with rapid expansion. By cutting out the TV middle man and delivering the content directly to those fans who care enough to seek it out, the UFC will undoubtedly save themselves headaches. However, this represents part of a more fundamental change in the UFC’s business model. Rather than being a platform reserved for the elite fighters who fans will pay to see, the UFC is taking a more active role in developing prospects on lower level cards. This is perhaps in recognition at the limited nature of the independent MMA scene, and the great difficulty the UFC has had in signing good up and coming talent from competitors like Bellator. The expansion in markets and the expansion in purpose is far more significant that the Network itself.