The UFC’s Roadmap in China: Short-Term

Several weeks ago MMAPayout.com engaged in a discussion regarding the UFC’s three biggest challenges to entering the Chinese market: battling Chinese conservatism; generating material revenue; and, remaining patient in the short-term with an eye on the promising long-term. We’ll advance that discussion today, by focusing on a potential short-term roadmap to success for the UFC in China.

Objectives

The UFC needs to determine what it wants to accomplish with this expansion into China – both in the short-term and long-term – before it actually lays out a road map and sets down the path. Therefore, the following is a list of brief objectives the UFC is likely striving to achieve in the market:

1.) Generate awareness and educate the Chinese about MMA/UFC
2.) Cultivate interest in the UFC brand
3.) Accelerate the growth of grassroots Chinese MMA
4.) Establish a viable business model for UFC Asia

I’m sure there are others that the UFC has identified and its are likely more detailed, but this is the gist of what needs to happen.

The Short-Term Roadmap

1.) Television Exposure

The UFC is a controversial product entering a conservative marketplace. Its needs to generate awareness and educate the base Chinese population before it can truly begin cultivating a market in the country. The best way to accomplish this is through television.

Television in China gives the UFC a window into the mainstream with exposure that extends beyond the 18-34 demographic that the Sohu.com platform currently affords the company. Depending on the type of television deal(s) the UFC signs, it could have access to as many as 1.2 billion consumers. This access is crucial because it gives the population an opportunity to see what MMA really is and allow them sufficient time to grow comfortable with its existence. This television deal shouldn’t be a blitz, nor should it go unsupported. Exposure is something you build to a crescendo and complement with other content/information through PR, advertising, and social media – although the latter is difficult in China.

CCTV is the dominant television network in China and owned by the state. CCTV 5 is the defacto national sports channel and potentially a very powerful ally or obstacle to the UFC’s exposure ambitions in the country. If this were ten, or even five, years ago I’d say the UFC should be looking to do whatever it takes to do a TV deal with CCTV – even if it meant submitting to poor terms that might amount to zero rights fees coming back in the “exchange”. However, there are now those that believe CCTV’s monopoly on the Chinese television market is coming to an end with the emergence of bona fide regional networks that are supported by a strong demand for localized news. Thus, a potential alternative to a deal with CCTV might be to sign a string of regional networks in China (e.g., Mongolian TV) or at least those that concentrate around the major Tier 1 cities like Shanghai, Beijing, Guanzhou, and Shenzhen.

2.) Selling the Lifestyle

There are two main ways the UFC can sell the sport in China. The most obvious strategy comes via the natural appeal of the product; everyone “gets” fighting and some even like it. If given the proper exposure, many of those that like it will become UFC fans. The other strategy is to promote not just the product, but also heavily emphasize the MMA/UFC lifestyle. The emerging Gen Y’s in China – think 18-24 or even 18-34 – are heavily influenced by American and Japanese popular culture. If the UFC can manage to convince the Chinese consumer that the UFC is the next big thing in the US, it will instantly increase its credibility within the market.

There are case studies that support enhancing awareness and interest through lifestyle promotion. The NBA was the first (in many regards) to do this in the market, and the results have been fantastic. In addition to promoting the sports at the grassroots level and NBA games through television exposure, the league has also pushed very hard to integrate the basketball lifestyle into Chinese culture. There are a ton of factors that figure into the NBA’s success and it really stands as a compliment to their integrated strategy, but you wouldn’t believe the number of kids wearing basketball shoes, jerseys, and long shorts in Beijing or Shanghai. It’s consumer behavior perpetuated in large part by lifestyle promotion.

3.) Merchandising

It goes without saying that clothing, equipment and other related merchandise are necessary for the adoption of the UFC lifestyle. Just the same as Chinese NBA fans can buy a pair of Nike Zoom Kobe V’s, the Chinese UFC fan will need to be able to purchase UFC or Tapout clothing and different types of training equipment to fully embrace the UFC lifestyle.

However, the Chinese retail situation is comprised of a rather convoluted distribution system and greatly troubled by the black market counterfeit industry that exists nearly everywhere in the country. It would certainly behoove the UFC to move on establishing these connections now – which I’m sure will be one of Mark Fischer’s preliminary actions – because it may take a while to sort out.

Yet, establishing merchandise in the market will prove vital to the UFC’s agenda. Not only is merchandise necessary from a lifestyle perspective, but also from a promotion perspective. Merchandise acts as a non-funded form of promotion that helps to reinforce and perpetuate a brand message through a sort of third-party endorsement. The Chinese may be influenced by American or Japanese culture, but nothing influences more than a Chinese individual sporting the latest perceived trend.

Furthermore, the sale of merchandise also adds a much needed financial component to the UFC’s operations in the market.

Check back next Monday for the final article regarding the UFC in China. We’ll be taking a look at the UFC’s long-term roadmap in the country.