RondaHonda'dmymangina3744 - MMALOGIC -
I dont see any fights that will even sniff 700k buys in 2014 unless GSP or Brock comes back.
What do u think the worst case scenario is if the UFCs numbers don't improve?
if the cable numbers dont improve i dont believe you can sustain nor support 13 ppv's a year. maximum 11. Look at it this way... the 2 worst ppv's in 2013 pulled around 180k (aldo vs porier) and 140k (hendo vs Rashad).
So we currently have a new floor of around 140k. (we have yet to see what that is since the move to fs1 which means it could be even worse).
lately everyones ppv's have been dropping since the move to fs1 (jones, cain, GSP) and it doesnt look like there's a fight on deck for 2014 that can sniff 700k buys which means we're also likely looking at a new ceiling (at least for the time being).
the floor has dropped, the ceiling looks like it will drop in 2014 whcih means the average will drop. The most important is the floor because at some point it doesnt make sense to place an event on ppv. Less than 100k buys doesnt make sense on ppv.
I dont believe a cable audience of 700k can support nor sustain 13 ppv's a year. if the cable audience doesnt improve the amount of ppv's have to drop.
Showtime cant sell half of 13 ppv's a year with a boxing audience of 700k... boxing has a somewhat different model but you get my point.
If the cable audience doesnt improve I would move 2 ppv's a year to the digital network and try to build the subscriber base on that and decrease to 11 ppv's a year. I would continue that until I found a sweet spot (which could be around 8 ppv's a year)..
Keep in mind the more subscribers you have on fight pass (ufc digital network) the more people you'll have buying the ppv's through that service which means you keep all of the money. if zuffa can get 100k people buying ppv's through fight pass that's like having 200k typical ppv buys.
A floor of 140k is great if most of those buys are made through fight pass (ufc's digital network).
if the 700k cable audience doesnt improve the sport will become flacid in the states... the sport isnt going anywhere but it will just become flacid (which it seems has begun).
I expect Jones, Ronda, Cain, Weidman, and Hendricks to fill some of the void, but not all of it. Not only did guys like GSP and Anderson fill the void of their predecessors but they expanded it. GSP pulled way better buys than hughes. Anderson pulled way better numbers than Franklin, etc...
the model of placing title fights on free TV and then moving them to ppv hasnt worked. 8 fox shows in and zuffa has yet to produce a single ppv draw. Zuffa had a much better track record of placing non draws on ppv's next to other draws and getting people used to paying to watch them fight.
I would move title fights exclusively to ppv and completely differentiate that product. I would do 2 title fights per ppv event. Placing title fights on fox have hurt ppv more than they've helped.
500k domestic subscribers at 14.95/mo with fight pass and you effectively replace fox revenue (90m a year). 1.5m domestic subscribers at 14.95 a month and you effectively replace both fox and ppv revenue (zuffa's side).
I estimate that Zuffa needs to be generating around 400m a year in revenue from the domestic market to reach it's domestic revenue potential. The question is what is the best way to do that. The easiest way would be for fox to pony up. the other way would be a combination of digital network plus ppv. The only way Zuffa can make 400m a year on free television is if the carriage fee model (where most of the population is subsidizing sports rights) continues. If the carraige fee model (bundling) goes away (which most suspect it will with all TV content eventually moving to streaming services) It's going to be harder to get the rights fees.
I believe the sweet spot is the digital service at 14.95 a month (eventual price once all live fs1,fs2 and fox content is on it) plus around 10 ppv's a year.
at 1m domestic subscribers at 14.95 plus 5 million domestic ppv buys (without the cable and satelite companies taking half) plus keeping all of the incontent ad spots means 400m plus in annual domestic revenue for zuffa (not counting gate, etc...).
Once everyone is used to streaming content on their TV's all you'll have to do is place a huge fight like Anderson Silva vs Weidman 2 on the digital service and you'll get to a million plus subscribers.