Media Analysis: Paradigm for Profit

May 31, 2008

The Analogy:
You remember those annoying word analogies from the SAT? Well’s here’s one for the MMA world:

Spike TV : UFC :: CBS : Mixed Martial Arts

(Translation for those like me, who despised the SAT: Spike TV is to UFC what CBS is to Mixed Martials Arts.)

When EliteXC hits the airwaves on CBS this Saturday, it could trigger an explosion in popularity of mixed martial arts, the same way The Ultimate Fighter (TUF) turned one brand, the Ultimate Fighting Championship, into a very lucrative venture.

CBS and EliteXC could follow a similar path that will not only benefit the EliteXC brand, but take the entire sport of MMA to the next level.

Before It Was TUF:
From most published accounts, back in January of 2005, the UFC was a struggling organization, trying to carve out its identity in a crowded sportscape. It was trying break out of what was believed to be a failing pay-per-view based business model. Stuck in a niche somewhere between the legitamacy of boxing and the pagentry of pro-wrestling, more people associated the UFC with the term “human cockfighting,” than mixed martial arts.

After spending years and losing millions to transform the UFC from spectacle to sport, success happened almost overnight. The UFC’s partnership with Spike TV on The Ultimate Fighter reality series turned things around.

But, before The Ultimate Fighter, there wasn’t much MMA to be viewed without forking over about 30 dollars for a pay-per-view event.

Not really a great business model for a sport that at the time, still had such an unpalletable connotation. Add to that a cultural affinity for striking-based combat sports like boxing and unfamiliarity with the techniques of submission grappling and Brazilian jiujitsu and you end up with pay-per-view price tags that were too high for potential fans to sample the sport.

Why It Worked:
The Ultimate Fighter was like the free samples they pass out at your supermarket. Most people think twice about shelling out $6 for a bag of teriyaki chicken, let alone five or six times that for a pay per view. But TUF built a strategic bridge between the UFC and its potential fans.

In partnering with Spike TV, the UFC received the additional advantage of “fan-base crossover” since World Wrestling Entertainment still aired its RAW show on Spike at the time. Spike seized on this and cross-promoted the TUF debut during WWE RAW shows.

According to media analyst SNL Kagan, cable penetrates nearly 58% of US households, roughly 65-million homes. Combined with satellite, Spike TV claims it reaches 96-million homes. So in launching TUF, the UFC provided a hugh potential fan base with a free sample of what they could see on the pay-per-view.

As pay-per-view sales steadily increased, what made the UFC so powerful was not necessarily how many people were watching, but who was watching. The UFC-Spike tag-team became a synergetic force that catapulted the UFC into the wallets and minds of the much coveted 18 to 36 year old male demographic.

Too TUF?:
With the Writers Guild of America strike in full swing, network executives looking for fresh programming came knocking at the UFC’s door. Despite negotiations with CBS and HBO, a deal was never reached. While CBS or HBO understood the power and saw the potential of UFC brand, there were certain concessions they just would not make.

Much speculation abounded as to why, and a big part of that was believed to be the UFC asking for too much money and their desire to control/ produce the broadcasts and use their own broadcasters.

Filling the Void:
Since the UFC couldn’t come to terms with the networks, the networks instead decided to play ball with some of the other promotions that had sprung up as a result of the UFC’s profitability.

The big winner became EliteXC, that on 2/28 announced they had reached an agreement with EliteXC.

CBS realized that instead of submitting to the UFC, they could instead throw their own muscle and money behind EliteXC, a brand which it partially owns. EliteXC President Gary Shaw had also secured what the promotion needed. A center-ring attraction that could appeal to a broader spectrum than the UFC fan-base. Regardless of Kimbo Slice’s fighting ability, he is a curiousity to which potential fans are attracted.

Selling Mixed Martial Arts:
Unlike pay per view or even Spike TV, the CBS EliteXC broadcast will reach virtually every home in America with a television. According to SNL Kagan, that number is over 112-million homes. Consider that the UFC does between 400,000-600,000 pay per view buys, and you get an idea of how big of a stage CBS provides.

If the UFC had that stage, it would go about business as usual, protect its market dominance and mention only its brand of mixed martial arts. Since that is the believed to be among the very reasons the UFC did not get a network deal, what will surprise UFC fans most about Saturday night’s CBS coverage of EliteXC is its openness.

CBS play-by-play personality Gus Johnson says he has not been approached by anyone, at EliteXC or CBS, about ground rules for the broadcast, or making it an “EliteXC-only” show.

He told MMAPayout.com, “We’re not going to pretend that the UFC doesn’t exist. The UFC has some of the best fighters in the world. We’re going to sell what we have to sell, but we’re not going to the cheat the fans and pretend like that fighters in another company don’t exist. Eventually we want to get to a situation where the best fighters fight the best fighters.”

That open coverage of the event will lead to more open coverage in the sport.

Even more compelling is the “lock and key” nature of pay per view, where the programming is locked until the key, in the form of your payment opens it up. Whereas, you can actively seek out CBS programming, or just stumble upon something “that looks interesting” in your program guide or by channel surfing.

The Bottom Line:
If all goes right according to the CBS/EliteXC plan, MMA fans will wake up to a very different world on Monday morning. Suddenly, people who never showed interest in the sport will seek them out to talk about “that Kimbo guy.”

In all the quotations, pictures and sound bites from the press events leading up to Saturday’s show, Mauro Ranallo gave, perhaps, the most telling quote. It summarizes the needs of the sport, the need for open commentary from broadcasters during events and the need for promotions to work together.

Ranallo told reporters, “I am just glad that CBS and ProElite are going to promote the sport of

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