UFC Reaches Settlements in Piracy Suits

July 9, 2010

The Staff at MMAJunkie are reporting the UFC has reached confidential settlements with over 500 businesses and individuals accused of illegally broadcasting UFC pay-per-views over the internet.

“We are committed to standing toe to toe with anyone trying to illegally broadcast or stream UFC events,” UFC President Dana White stated. “Today’s announcement further drives home the fact that we are fully prepared to pursue any business or individual that steals our programming.”

 

“When people start going to jail, people will stop doing it,” White said.

 

UFC CEO Lorenzo Fertitta testified before the U.S. House Judiciary Committee earlier this year during a referendum on Internet piracy of sporting events. He said the UFC’s anti-piracy team, for example, had uncovered 271 illegal streams of January’s UFC 106 event with more than 140,000 viewers.

 

“The piracy of live sporting events is illegal, it kills jobs, and it threatens the expansion of U.S.-based companies,” Fertitta told lawmakers. “The UFC is potentially losing millions of dollars a year from piracy.”

Payout Perspective:

The UFC has been filing lawsuits and doggedly pursuing internet pirates for the better part of the last year months, so it’s nice to finally see some settlements result from the hard work.

However, I still can’t help but think there’s a limit to what the UFC can and should do to prevent piracy. There exists a certain point where the next dollar spent on preventing piracy experiences diminishing returns in terms of what it’s able to garner in settlement or prevent in theft. Then you consider the opportunity cost of where that money is being spent compared to where it might be better spent (lobbying for regulation, another Primetime show, some new marketing campaigns, etc.). It would be unwise to pursue every internet pirate to the end of the earth as has been suggesting by UFC brass in the past.

Moreover, there are some positive effects of piracy. The illegal broadcasts increase the UFC’s reach and distribution; the broadcasts provide an avenue for less avid fans to consume the product and continue to grow their interest in the sport (to the point where those fans do begin to pay for the product).

I also question the notion that those watching illegal broadcasts would actually pay for the product if it were not illegally available for free.

Thus, I agree most with the philosophy of the UFC’s chief legal counsel, Lawrence Epstein:

“Are there always going to be people that are going to steal? Yeah,” said Epstein. “There are going to be people that rob convenience stores and banks, too. You can put up bars, you can put up cameras, but people continue to do bad things. You’re not going to stop all of it.”

 

“I think this is about stopping the good majority of law-abiding citizens who, without education, might not understand that what they’re doing is not the right thing to do.”

The only point upon which we differ is I’m just not sure that these lawsuits even stop the person that doesn’t think they’re doing anything wrong. Most people are not going to hear about these lawsuits. Perhaps I’m being cynical, but I also tend to think most people don’t care or don’t think they’ll get caught, either.

These lawsuits do not provide a ton of deterrent on the demand or supply side.

9 Responses to “UFC Reaches Settlements in Piracy Suits”

  1. Greg on July 9th, 2010 8:04 AM

    People who watch the free streams weren’t gonna pay for it in the first place. Dana is a thug.

  2. Machiel Van on July 9th, 2010 9:04 AM

    I agree that it’s likely that the vast majority of people who watch illegal PPV streams would not have otherwise bought the events, so it’s therefore true that this type of piracy is bringing more eyeballs to the UFC’s product. However, it’s also a good thing that the UFC has taken a stand against piracy, as it sends a clear message to those who choose to set up illegal broadcasts that they might get caught, and if they are caught they will be punished. You are 100% correct that there is a point at which Zuffa may actually lose money (actual or opportunity cost of new programming) trying to combat piracy, so hopefully they realize where to draw the line and strike a balance efforts and results.

  3. Machiel Van on July 9th, 2010 9:12 AM

    It’s interesting to me that Zuffa has not, to my knowledge made any public statements regarding Peer2Peer file sharing used to share UFC events after the live broadcast concludes. Seems to me people who WOULD actually pay for the event might be using this medium to access fight broadcasts, merely making sure the results aren’t spoiled for them until the download finishes. From what I’ve read these illegal streams are often very poor in terms of quality, while a video file of the event can even be in HD quality. It is piracy all the same, so it’s interesting that Zuffa doesn’t seem to take a stance on it.

  4. mmaguru on July 9th, 2010 3:33 PM

    I have a feeling this is the end of that story. My opinion is that this is nothing more than a spin on what has really taken place. They basically got nowhere and provided a sound bite with an absurd number of 500 settlements. I’d really like to know who these 500 settlements were? But guess what? None of us will find out because it was “private” (you can take what you like out that statement).

    Anyway, UFC went down a path that ended up as a dead end and probably cost them millions of dollars with little gain, just as the music companies and movie companies found out the hard way.

    Thanks for the update, I was interested to see if they would actually take this issue to the courts.

  5. Brain Smasher on July 9th, 2010 4:44 PM

    I have a hard time believing they reached a settlement with all 500 parties at the same time. Sounds like a made up story to scare people out of downloading UFC 116 in hopes of getting more replay buys of an event everyone is talking about as the best UFC event in a very long time.

    As far as the UFC wasting money to persue these people they really go after(which i believe are still in the process of doing) I dont think that is really the case. For example if the 500 settlements is true. Say it cost the UFC 1 million to go after these people. That breaks down to 2K per case. The UFC would easily get that in the settlement. Keep in mind they are not going after the guy downloading in his home. They are going after sites who sell the events and host the events. Also they go after bars who have business accounts yet use a home account to order the UFC. It cost about $1,000 to order a UFC in a place of business. Some of these bars and clubs are getting the residential price of $45 and shiwing it to a bar full of people and charging a cover charge. These types the UFC has every right to go after. Thats exactly what they are doing. Going after people who are illegally making money off a stolen product or those who supply huge crouds of would- be PPV buys with the stolen product.

  6. mmaguru on July 9th, 2010 8:11 PM

    Brian,
    The only settlement UFC will get out of any of those sites re-selling the content is a guarantee that they don’t do it again – if that. Probably more or less don’t do it again and don’t talk about what we agreed on. It does not matter if it’s a million or 100 million, their efforts will be in vain as I mentioned above as evident of the movie and music industry. Trust me this is all smoke and mirrors and that’s why these things happen in “private” because there’s nothing to really talk about. The end users who are watching this sub-par quality content are a) not real fans b) poor, either way you get nothing in return by pursuing them.

  7. choop on July 11th, 2010 8:52 AM

    If you’re willing to watch some terrible crapping stream that you have to squint at a PC screen to see, are you really going to pay for the PPV anyway? As a fan, I can’t imagine watching a stream – it would horribly ruin the event for me.

  8. Whispering Death on July 11th, 2010 9:34 PM

    I think this strategy is much more emotion than logic. It’s “hey, they’re stealing our money! Let’s go after them!” moreso than an integrated plan of legal, press, and public relations arms to achieve a desired aim in changing how hundreds of thousands of people behave.

    Furthermore, their focus has largely been on justin.tv or similar sites. I haven’t heard anything of dedicated MMA streaming communities or torrent trackers or anything like that being targeted. It’s almost as if Dana went on justin.tv one day, was disgusted, and then tasked the legal team with fixing that which disgusted him.

    I don’t know if this is a short term or long term thing, but I’m not very impressed with their initiative. It seems like the RIAA all over again. Lawsuits are filed, money is spent, lightning strikes a few users in the mass of hundreds of thousands, and the world turns as it did in the beginning without interruption.

  9. Dan on September 1st, 2010 5:08 PM

    “If you’re willing to watch some terrible crapping stream that you have to squint at a PC screen to see, are you really going to pay for the PPV anyway?”

    I don’t know what year you are living in but this is 2010 and some of these streams are very high quality.

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