The UFC has leveled off with their pay-per-view (PPV) sales. They’re still posting solid figures, but with absent draws like Brock Lesnar (retired), and Georges St. Pierre (injured), the company has struggled to increase the most profitable aspect of their business.
It’s certainly not a gloom-and-doom scenario. Jon Jones vs. Rashad Evans recorded 700,000 buys at UFC 145; the all-heavyweight card featuring Junior Dos Santos vs. Frank Mir did 560,000; and the UFC 148 rematch between Anderson Silva and Chael Sonnen will undoubtedly pull in great numbers.
But cards that do not feature huge names are not doing well. To kick off 2012, UFC 142 sold only 235,000 buys. And UFC 147, for which estimates have not yet been disclosed, is widely believed to be even lower.
This is not to suggest the UFC execs are applying for food stamps. Quite the contrary. They’re a successful, profitable company. But as the front company for a sport that has ambitions of being bigger than the NFL, a lack of growth in their most important area is not going to deliver them to the promised land.
There isn’t a lack of interest in the sport. It’s just that people are buying only the biggest events. And who can blame them? At about $50 a pop, with 16 PPVs a year, it’s quite an expense. It becomes a choice. Should we buy the Anderson Silva PPV or the Rich Franklin one? You don’t have to be Kreskin to predict that one.
So what can the UFC do to spark more interest in PPVs? Here’s a simple solution.
They can price events based on quality. Currently, every event comes with the same price tag. The reason is because the UFC has built their business on the UFC brand, not any particular fighters. It’s the anti-boxing strategy, and it’s worked beautifully for them.
But they’ve leveled off, so perhaps a little tweaking is in order.
A Ford Focus and a Ford F-150 are both of the Ford brand, yet they’re priced differently based on cost and quality. Almost every product we buy is priced that way. For a big card like UFC 148, the current price tag is fair, and consumers can justify their purchase. But for UFC 147—with a main event of Wanderlei Silva vs. Rich Franklin—the cost should have been calculated to take those things into account.
It wasn’t, and the poor numbers will reflect the attitude of consumers.
The consequence of such price structuring is an immediate loss of revenue. But that’s short-term. The long-term, ancillary benefit is that more on-the-fence fans will be enticed to buy an event they normally wouldn’t—some of whom will become loyal fans who develop a personal stake in the sport and its athletes, and they’ll purchase more PPVs down the road.
It’s a simple growth strategy, and it adheres to the one absolute economic truth: people respond to incentives.
The UFC would be throwing the fans a bone at a time when they would most benefit from it. This may sound greedy considering the amount of free fights they offer. Those free fights are greatly appreciated, but they’re not big name fights. People who become avid fans don’t care who’s fighting on FOX. They’ll watch regardless.
Right now that is what the UFC is lacking.
Big name fights are what generate buzz. Dana White is right and wrong when he says you cannot judge a card until it happens. He’s right in that we’ve seen time and again lackluster events on paper turn out to produce some great fights. But he’s wrong in that as consumers, we can and do judge our purchases, and we have every right to. That lackluster card may have turned out to be great, but that doesn’t matter if no one had interest enough to buy it.
Can the UFC draw in new fans with current PPV prices?
Now is the time for the UFC to draw in the millions of potential fans out there. They have a near monopoly on the market to the point where many of the fans they want to reach don’t even know the sport as “MMA,” but as either “UFC” or even worse, “Ultimate Fighting.”
They own Strikeforce. Bellator is still a second rate promotion. They have 90 percent of the world’s top talent. And they already realize that to get to the next level, they need to veer away from the PPV model. But that will take time.
In the interim, the UFC needs a strategy that will draw in new fans. Those potential fans—we call them "casual fans"—want in. They simply cannot justify the cost.
By offering casual fans incentives to buy, the UFC will draw them in and ensure a bright future for not only themselves, but the sport as a whole.