Sponsorship, Broadband Content, and MMA
November 2, 2009
The potential for MMA to adopt an online platform is something that MMAPayout.com has discussed before, but few people have outlined the business model or made a better argument than Frantz Cayo of the Sports Business Journal.
Here’s a snippet of the excellent article he wrote for the journal detailing the means by which broadband content could play a more integral role in the distribution of sports content:
By Frantz Cayo
In 10 short years, broadband video has transformed itself from being an anomaly among most American households to standard fare for mass audiences. Most voraciously, however, online video is being consumed by sports fans whose appetites are insatiable for highlights-on-demand, sports news-on-demand, and fantasy tips to help them win their leagues.
When I started investigating the business model behind streaming video at its inception, most people could not conceive of paying for a medium that seemed to pale in comparison to cable television. As a fan of television history, I promoted a strategy of sponsored content for this new digital medium, similar to the model used when television use first exploded after World War II. The other alternative being proposed was a subscription model, which I maintain is only optimal when you have access to limited and proprietary content (e.g. Major League Baseball games) online.
Ten years later, few successful iterations of the subscription model have succeeded, leaving the sponsored model as the one still showing promise. The biggest liability of the sponsored content strategy, however, is that although everyone talks about how online video is where media dollars are migrating, we have not yet seen the great migration. The responsibility for this is twofold: Media buyers are still not entirely comfortable investing their money online, and content providers are not offering compelling options to attract their clients’ dollars. Even with a huge revenue ceiling, no one seems to be able to get a handle on the business model. If our industry wants to see the online sports video revenue growth that most industry experts have predicted, we have to come to terms with three realities:
1. Branded entertainment is critical to the growth of the online video market.
2. Providing branded entertainment solutions might necessitate organizational change within the sales and production teams.
3. Sponsors need to provide an assist as well, and offer different advertising experiences online.
Read the rest of the article here: www.sportsbusinessjournal.com. It’s a subscription based service, but a necessity for any sports business lover out there – well worth the money.
Why Broadband Could Be Important to MMA
There are many questions currently being asked of MMA; chief among them is, can the sport sustain its growth?
Most people realize that MMA cannot afford to make the same mistake that boxing has: put a price tag on all of its greatest fights and deprive the casual fan of the opportunity to see what the best truly have to offer. But how does MMA avoid falling into this trap? Strikeforce on CBS, this weekend, is a start. Likewise, the oft-rumoured television deal between the UFC and a big four network could give MMA a much needed push into the mainstream. But is network television really the only answer?
Television may be the best way ahead for Strikeforce, because they’ve yet to develop the brand recognition to be without it. However, in the case of the UFC, it’s difficult to be certain.
The television platform that exists today – and that has largely existed over the last 50-60 years – may not be the viewing platform that exists in ten, or even five years, from now. In fact, with all the rapid technological advancement and application going on within other distribution platforms (internet, wireless communication, music, etc.), a change in the way consumers view their entertainment is probably closer than most think.
By no means am I willing to argue that the UFC should avoid television. I’m simply advocating that taking a broader view of potential distribution platforms might allow the UFC to reach the masses more effectively; all the while establishing a business model that better hedges the inherent risk of its current PPV model through further diversification of distribution channels and revenue streams.
Broadband for MMA
MMA is quite well-suited to Cayo’s model, because it’s the type of unique product that could leverage tailored sponsorship content into something that greatly appeals to the younger, tech-savvy, and trend-setting MMA demographic.
The first event would be experimental and small scale in nature, but the basic steps above and beyond normal event preparation are these:
1.) Find sponsors.
Without sponsorship revenue the project isn’t financially viable - the live gate revenue wouldn’t cover the combination of production costs and fighter pay. It’s essentially the crux of the entire model; the UFC would need to find a few big sponsors willing to take a risk, but also creative enough to think outside of the box.
The selling point is truly, how much value and ROI might a company like A-B Inbev generate over the course of a two hour program where Bud Light is very closely associated with the UFC brand? It’s an opportunity not just to activate a consistent, semi-exclusive association, but also develop a few UFC-themed advertisements that hit harder than the normal spot.
Given what transpired at UFC 100 between Lesnar and Bud Light, what UFC fan wouldn’t be paying attention to Lesnar in a Bud Light commercial (and, more importantly, what’s the recall in that situation between the UFC and Bud Light?).
2.) Generate online awareness.
The value that sponsors get on their investment is directly related to viewership, but material viewership isn’t going to happen unless UFC fans are well aware of what is taking place and when.
The UFC is well-positioned to effectively utilize an integrated marketing campaign to develop sufficient awareness of its online presence and future scheduled broadband content. This is where Spike TV and PPV spots, online banner ads, print ads, street ads, and social networking sites like Youtube, Twitter, and Facebook, would need to come together and produce singular, consistent message.
3.) Obtain technical capability.
It’s probably something that the UFC would out-source to begin with, because they wouldn’t have the technical know-how or server capacity to host such an endeavour themselves. The tricky part here, from a management perspective, is integrating and linking the production team with the out-sourced digital team.
The Risk and Return
There are risks:
- Will the casual fan be interested in watching a fight online? Essentially the question.
- Moreover, are consumers truly ready for sponsored content?
- How might online events impact the UFC’s relationship with Spike TV?
- How can the UFC ensure it meets the requisite viewership for itself and its sponsors.
However, in the grand scheme of things, there aren’t any significant, long-term implications of a failed broadband effort. The UFC isn’t yet in the position where anyone in the business community would care – or be surprised, for that matter – if the UFC failed.
Though, if the UFC succeeds, not only does it gain notoriety for being a pioneer of this new model, but it will also give itself the widespread exposure platform that it has long coveted – an exposure platform free from the meddling grasp of network television executives that may not understand the sport.
2 Responses to “Sponsorship, Broadband Content, and MMA”
Got something to say?
Social comments and analytics for this post…
This post was mentioned on Twitter by FreeFighting: MMAPayout: Sponsorship, Broadband Content, and MMA http://bit.ly/nyig9 Full http://bit.ly/20IG4O...
[...] to discourage piracy) and pick up its revenue generation in a different area? This is where I think the broadband distribution model might have [...]