While the action doesn't just occur in the board room, professional sports is as much of a business as the action that goes on other areas of the economy. It's early in 2014 and already the sports business world has heard of two important announcements that will have an interesting affect on how both the Ultimate Fighting Championship and World Wrestling Entertainment groups will distribute their content to the masses. The UFC Fight Pass and WWE Network are two entries in an already interesting sports business development this year.
In essence, both of these platforms are very similar to one another. Those who subscribe to either the UFC Fight Pass or WWE Network will receive access to a number of benefits: archived content from past shows and events, original content such as documentaries and studio shows and live sports events as they occur.
The UFC Fight Pass will be the only way fight fans can watch the UFC Fight Night events such as that set for this coming Wednesday. The WWE, on the other hand, has gone above and beyond in what they are providing to subscribers. Fans will not only get access to weekly shows, but their monthly PPV events will also be a part of the subscription cost. Both outlets have the opportunity to be developed into powerful revenue streams by giving their consumers more reason to subscribe to their services.
While the UFC hasn't gone as far to give access to their PPV content through the UFC Fight Pass, that can eventually change. If the WWE sees positive results from their WWE Network, do not be surprised if the UFC follows the same path. The business model can greatly shake up the way television networks and distributors use their sports content.
For example, the WWE usually offers Pay-Per-View events at the cost of $44.95. Their biggest show of the year, Wrestlemania, has run upwards of $60 each year. The WWE receives half of that money from every consumer that purchases the event when it occurs. The other half goes through the outlet that distributed the show on PPV. With the WWE Network, Vince McMahon has found a to eliminate the middle man and receive all of the benefits from the event. If one consumer purchased every WWE PPV event in 12 months they would spend approximately $539.40 on special events. The company would receive half of that amount which equates to $269.70. If that same consumer elects to subscribe to the WWE Network the organization would receive $119.88 per year. If the company can convince those consumers who avoid the high costs of monthly PPVs to subscribe to the network then they will reap a large financial reward.
The millions of consumers that already purchase the monthly events will most likely matriculate over to the WWE Network. This platform is for the people that have the same amount of interest but do not have the ability to purchase events every month. DirectTV knows the implications of the platform and has already threatened to remove the WWE's event from their television services.
The UFC has the same issue with their current fan base as many individuals are upset that prices for monthly events are rising. The UFC continues to saturate their market with more fight cards however the biggest names are only available on the most expensive events. If 2014 PPV numbers continue to drop, then the UFC could benefit from moving their events over to their UFC Fight Pass. Enticing those who don't purchase or illegally stream their events to subscribe will bring in more overall revenue throughout the year.
The development of the UFC Fight Pass and WWE Networks are two important stories to watch for all of 2014. If the number of subscribers continues to climb then the results will be seen when both of these major sports organizations provide their consumers with even more content online. Larger revenue gains is their biggest reason to do so and one organization is already on the right track.