Darren Rovell of CNBC talks about the issue of online piracy as it pertains to sports organizations like the UFC.
Executives with Major League Baseball and the UFC were in front of the House Judiciary Committee on Wednesday to discuss the increasing problem of live streaming of its sporting events to the Internet.
It’s an interesting issue when you consider that the popular sites like Justin.tv, which has featured millions of hours of live content, contend that they are just the middle man and therefore can’t be held responsible for everything that is posted by its users to its site.
UFC chairman and CEO Lorenzo Fertitta, who testified on behalf of the mixed martial arts league on Wednesday, told CNBC that live streaming to the Web is a major concern, but it’s also hard to deal with.
“These sites provide us with a tool to take live streams down,” Fertitta said. “But for our last fight, there were 160,000 streams going.”
Payout Perspective:
The issue of protecting intellectual property is obviously important for the sports and entertainment industry, because they largely see it as lost revenue generating opportunity (which ultimately forces job cuts).
I’m not convinced that 160,000 streams necessarily means the UFC loses out on the equivalent number of buys. People pirate because they can, not because they must. However, that isn’t to say that piracy is justified – it’s not. Zuffa has every right to protect its interests, because it is costing them money (even if the exact amount is debatable).
The problem is how do you stop it? Like Fertitta says, it’s difficult to reign in the piracy, because everytime a website gets shut down, another pops up in its place.
Thus, the solution to the problem of piracy isn’t likely to come through increased government regulation that levies more severe penalties and fines against infringing parties. Instead, both the sports and entertainment industries will need to better incentivize the outright purchase of their products through offering the purchaser greater value than what he/she might get through piracy. Then they need to work to make that purchase exclusive and perishable to a single use.
It’s at this point that I often think about the development of the business model the music industry has used since the inception of the MP3 and portable music players. Artists and record labels have been forced to diversify their revenue streams and de-emphasize the importance of album sales in favour of things that consumers can’t pirate (such as the experience of a live concert).
It’s far-fetched, and certainly a radical way of thinking, but is there a way that the UFC might be able to give a part of its product away for free (in order to discourage piracy) and pick up its revenue generation in a different area? This is where I think the broadband distribution model might have legs.
But, in doing so – in giving away some content for free – are you sacrificing the perceived quality of the product? In other words, might the purchase price of “free” act as a poor signal of quality and value, and as a result, might that negatively influence demand?
All very interesting questions. I’d like to see a debate on this one, so bring your game in the comments section below.
How are they gonna stop sites in Russia, Spain, Croatia, France, Brazil, and other countries? They aren’t, some of these guys actually purchase then post with a DV camcorder direct to pc.. its a vid shot of their TV .. that’s not going to go away any time soon without intrusive government intervention and an infringement on privacy rights.
They should offer decent online streams and lower the prices. You can compete with free, just make it easier and more reliable than stealing. Plus you can do chatrooms, betting pools, subscriber-only forums and other small inexpensive value-adds — which would all inherently be higher quality since it’s official and people paid money to get in.
The lowered prices would be more than made up by the increased number of buyers (i say this without doing any market research.) Offer a compelling service, keep disrupting the pirates as they are but at least that’ll drive frustrated pirate business to their service rather than sending them off to another sketchy pirate feed.
Ditch the PPV model and go for broadcast or cable with advertising spots. Then they won’t have to worry about people streaming it.
This is off topic (sorry about that), but what happened to that Wolf guy who just started here?
As far as the piracy stuff goes, it’s a game of cat and mouse and always will be. Not much more to say and I’m not too worked up over Fertitta and company missing out on some bucks.
Any move to offer lower priced access on the internet will be met (and ultimately suppressed) with strong opposition from the pay-per-view distributors. The UFC got slapped on the wrist for this when it first launched its online purchase option and heavily featured it in its event advertising. And that was with price parity.
I’ll continue to watch the PPV events live on Sopcast until a couple of things happen:
1. UFC numbered events are aired live, on network television (not Spike or another cable channel)
2. Dana White is replaced as the figurehead of the organization.
Personally, I don’t care for the UFC business practices nor the way Dana speaks about/treats fighters inside and outside of the UFC organization.
I don’t like the way Wal-Mart conducts business and refuse to patronize them as a result. The same holds true of the UFC. Some consumers have principles and refuse to patronize a business no matter how cheap their prices or how well their product is liked. The UFC just happens to be one of those businesses in my eyes.
the ufc streams need to be cheaper and better 60 bucks for the ppv I can justify but 60 bucks for a crappy unreliable stream is crap. Alot of these people are probably young people who dont have there own cable acounts or people who dont have a cable box so they cant order.
I have been following the UFC since UFC 1 and remember when i did pay for the UFC. But nowadays with like 2 events a month I simply cannot afford that for a whole year. 60 x 24(avg 2 a month)=1440 a year a lil steep for me. I am all for the growth of MMA but i cant support it like that. And its not like Dana White is actually trying to take care of his fighters with all this money. He holds a monopoly on them and obviously thinks they need him more than he needs them(Hendo). I am luckier these days that there are channels like HDnet that show free quality MMA on a regular basis. ALso MMA isnt only the UFC there are other organizations out there that actually care about the fans like Strikeforce.
I would pay $1 per individual fight if it was loaded on to itunes within minutes of each fight ending. I know this would take away some of their PPV biz but maybe some of the 160k streamers will make up for that. Otherwise I’ll keep watching bad quality vids with audio that is sometimes off.
And yes, I do realize that I’m stealing and I don’t feel good about it and I won’t even attempt to rationalize it.
I wonder how they can determine the 160K number? I believe the reduction in PPV buys as of late is due to the over saturation of the product combined with a lack of big drawing cards. I can see that the UFC is working to get more of their product on “free” TV – Versus, SportsNet, Spike, etc. which will eventually relieve the revenue reliance of PPV. If they put on 10 PPV’s a year with stacked cards and big draw fights they could average above 600K buys per event. That’s a pretty impressive number.
I assume they have some way of seeing how many watch each feed. Like You tube has views.
Back to the subject. I have never had a problem paying for PPVs of the UFC. I off and on have had illegal satellite over the years. But it was never intended for the purpose to not pay for UFC events. Its was other events and movies. Without it, I have never felt the UFC events were unreasonable. I never watched them stream online. I feel its to easy to get a few friends to go in on it or go to a public showing like sports bars or casino to see them. Rather than ruin the experience of an event due to poor quality streams, tied to a computer for 3 hours, watching it alone, etc. I started watching the UFC live on PPV during UFC 12 and have only missed 2 PPVs since. I remember the days of 1 PPV every 3 months. So its a big deal to me when a PPV from the UFC is on. I dont watch to cheapen the experience i look forward to.
I have used streams for Pride and other non UFC events due to tape delays of some sort. For the most part i feel those who stream UFC events on a regular basis are low income/class people who have to much time on their hands and are probabley not going to be much use to the UFC anyway. Anyone who has been to a UFC or seen the reports on this site know the UFC fanbase is middle to upper class. I think most of them, like myself would not find it worth the effort to try and steal the PPV. Kind of like how i used to pirate music CD’s and DVD’s. It was more because it was new and i could rather than i needed to. But it got old real fast and i found i would rather by CD and DVD’s than spend the time (and money) to steal them.
It comes down to added content and pricing incentives. First and foremost, the price of the fights should drop the following day (maybe by 30%). That is when most people will pirate the content and the UFC can steer some of those into PPV/ online buys. While they’re understandably hesitant about losing money on buys, it will save time and money on hunting down websites and illegal streams. Plus, there can be an added value and rewards package for those who buy fights. Personally, if I happen to miss a fight, I’ll happily stream it illegally. As the music industry learned, you cannot shut down, prosecute or otherwise prohibit illegal downloading. You have to dangle incentives to keep your audience away from it. Most importantly is convenience. Break up the content so it can’t be streamed in a single youtube video. Add audio only content, special behind the scenes video, online video blogs. Scatter the package and make the streamer search the internet and actually “work” to recreate the experience. An experience that can be conveniently delivered in a single package if paid for. Just some initial thoughts…
When the UFC can make 50 million off a single web broadcast like they can off PPV then they will.
It’s the cost of doing business in the modern day world with the readily available technology to try and be one up on whoever.
The guy streaming from his mom’s bedroom to 500 people on a website gets closed, a new one pops up tomorrow.
Truth is, I’m sure there are a lot of people out there, myselfincluded who will buy a show here & there “when it’s worth it” and then other times you’ll sit back and fire up the webcast stream and hope that the “red, blue or green stream” doesn’t crap out on you. Many know what I’m talking about.
Or they go and download a torrent or find the video on rutube come a day or two later.
It more and more soundslike corporate greed in every instance.
Boo-hoo…. such and such is missing out on making an addition 8 million dollars in PPV sales for the month of Novemeber… my heart bleeds for you. They all sound like a bunch of crying cu8ts. The record industry, the movie industry and every other assorted major company making millions and millions of dollars world wide. By them crying poverty, when it’s people in poverty who still spend their dollars on their products, all it does is alienate people from feeling “bad or wrong” about firing up a stream or downloading a cd. Be happy that your product is making you millions and millions, and don’t fight the people who enjoy the product but for whatever reason chose not to pay the MSRP from their living rooms. Be innovative, re-invent the wheel create new and exciting ways to create revenue streams to supplement your losses, it’s a cost of doing business like paychecks and taxes and lawyer retainers.
What you don’t spend on a TV or CD or Baseball whatever purchase, you spend in other ways. Merchandising is such a huge supplemental income for every major industry out there. The UFC has their T shirts readily available at every WalMart and Mall in America. I’m sure plenty of people who buy every show, as well as many people who only watch the free events buy the product. In the end the more “fans” you have the more products you’ll potentially be able to sell them that they can’t simple download and watch one time and move on from.
I can’t tell you the last CD I purchased, it’s been years but I’ve bought quite a few over priced concert T shirts, and been to a few live events. Experiences you can’t download from a computer.
The point is, if you’re a fan, you’re going to probably spend some money on the products you enjoy and support. But if you turn a fan into a bitter fan (ie. Raiders fans, Browns fans or Record/Movie Industry Pirates) they won’t support your product & they won’t feel bad about not giving you any revenue.
Yeah, it’s not hard to get a few friends together to split the cost or go out to a local pub to watch. I prefer the local pub model, get a chance to socialize, help the economy and keep the cost down to whatever level you want. A cost of a beer to watch a PPV is a good deal, even a couple of beers shouldn’t cost you more than 10$. Curious since I’m a bit internet un-savy, what is red, blue or green stream?
Last night it was Strikeforce on the special yellow stream. 😀
LOL at using “corporate greed” to justify being to cheap to pay for something you enjoy. If you want to steal something thats fine. Pretend X company shouldnt be compensated for entertaining you makes you a tool.
Steal, streaming, Pirating, etc is IMO a waste of time. I have soent thousands in the past trying to illegal satellite. X amount for this reciever card every couple months. X amount for a new program every few months, A few hundred bucks for a new system like emulation that never last. Buying readers, loopers, programmers, tech support, etc. Just to have it go down while everyone is at your house to watch the UFC and it may be days or weeks before its up again. Its a game of cat and mouse that costs you just as much in the end.
Stream is just as bad. You can never depend on the streams. Everyone on the net gets the link and crashs the site. Poor quality. You can never depend on it enough to envite a group over. Not that streamers have friends anyway.lol
Pirating should be a last resort for people who cant afford. But really those people who cant afford to pay should have better things to do than watching UFC. Like going to night school. But this might be an attractive option for kids in a basement somewhere. But as you get older you realize time is money and you get what you pay for.
It pains me to say this but I have to agree with the idea that its comedy to justify ripping off the UFC. Sure Zuffa kind of sucks, sure Dana is a tool and a bully but the fact is they have a product they are selling and deserve to be compensated by all those enjoying it. This is not to say I haven’t lifted a few UFCs off a torrent site or two (a day later) but the ones I really care about I shell out for trek on down to my local tavern and watch legitimately.
Just imagine how you would feel if someone was taking eight million dollars out of your pocket? No matter how much money you have that would still piss you the eff off.