Entertainment organizations like the UFC and WWE are venturing into risky territory with online membership channels. For those unaware, these two entertainment behemoths have recently launched their own internet channels. These channels require a monthly fee of $9.99 and allow members unrestricted access to massive libraries of past events, exclusive live content for the UFC, and access to monthly Pay-Per-View events for the WWE.
To the uninitiated, these channels are riding the coattails of other media ideologies such as Netflix and Hulu, although instead of being the middle man and offering content from multiple sources, they are offering their own content direct to consumers. This business model, while not new in its simplest form, is the next stage of evolution in broadcasting. Companies like WWE and UFC not only guarantee themselves monthly revenues directly from consumers, they also reap the rewards of sponsors while getting to keep the entire chunk of change instead of splitting those revenues with Cable Networks such as TBS, Spike, or Fox.
At the early stages of this content delivery model, the UFC and WWE are carving out a niche and building a strong committed viewership. However, there are quite a few landmines waiting in the future that may derail the hype train for this particular plan.
- 1. Alienating Business Partners
The UFC is currently under contract with Fox Sports to deliver exclusive live content on a consistent basis. The WWE is also currently under contract with the USA and SYFY networks to produce shows. How will these networks react to additional content being developed and distributed directly to consumers?
In the case of WWE, the result is the need to shop around for a new network to call home which they are currently doing. As for the UFC, there haven’t been any public discourse as of yet.
- 2. Alienating consumers
This is more prevalent for the UFC than it is for the WWE as the UFC will be streaming exclusive fight cards that are only available on UFC Fight Pass while the WWE will show most Pay-Per-Views to members instead of having to pay extra for it. If the UFC’s exclusive content was under card fights and prelims, I wouldn’t have a problem. But when it is an entire Saturday night card including a headlining fight that I want to see, I get a little upset.
I understand Dana White is a promoter first and the bottom line is the most important thing to him; rightfully so. However, I already buy Pay Per Views (Or watch them at the bar and spend money doing so) and I am also subjected to every bit of advertising squeezed into the broadcasts. I am not going to pay an additional $10 a month to watch more advertisements.
- 3. Extended Competition – Consumer Overload
Many media companies will be carefully monitoring the success of these networks in the short term for signs of viability. Both the WWE and UFC have limited competition when it comes to their respective niches, however, other entities will be looking to create channels of their own to get a piece of the pie. So what does this mean for consumers? Lots and lots of options.
So how could having a vast array of entertainment options using this model be a bad thing? Well, when consumers have to pay $10 a month for each of these channels in addition to every other niche brand that enters the market, customers will eventually revolt.
Exactly how many of these channels will each consumer be willing to pay for every month? My guess is not very many.