Examining The New UFC, ESPN Pay-Per-View Relationship Using Data-Driven Analysis

BY ADAM GROSSMAN

UFC announced yesterday that all of its Pay-Per-View (PPV) events will be available only on ESPN+ in the United States through 2025. UFC will receive a guaranteed revenue stream worth a reported “hundreds of millions of dollars” while ESPN+ will sell the PPV events at $59.99 per event on top of its $4.99 monthly subscriber fee. Why is UFC making this change away from a traditional pay TV model to work with ESPN?

Data appears to be at the heart of UFC’s decision-making process for two reasons. First, UFC wanted to obtain more data about who was watching events. As UFC chief operating officer Lawrence Epstein stated, “It’s really unlike anything we’ve had with legacy distributors like Comcast and DirecTV. The amount of data we were getting on buys from the cable industry was pretty much zero.” Second, the only data that the UFC had was bad data about its traditional model. As UFC President Dana White said, ““Why is it not the right move? Cord-cutting is real. It’s scary the amount of subs dropping every year.” 

The UFC’s decision to make a fundamental change its distribution model by examining data is at the heart of what is happening in the sports industry today. More specifically, sports properties, content rights holders, and corporate partners are all using data to drive strategy. In addition, White articulates the challenges that have occurred with traditional revenue streams where sports teams, leagues, and events of all sizes have seen declines in ratings, subscribers, and tickets.

This new UFC, ESPN deal demonstrates how data can be used to drive revenue to new platforms where audiences consume content. We can use the Block Six Analytics (B6A) Social Sentiment Analysis Platform (SAP) within our Partnership Scoreboard platform to show why this deal should be a beneficial partnership for both the UFC and ESPN.

Our SAP platform enables B6A to analyze social media to determine the demographic profile of specific accounts for six factors. For this post, we analyzed UFC’s and ESPN’s accounts on Twitter for ethnicity and age and compared that to the overall demographic profile of Twitter users. We found that both the UFC and ESPN disproportionally attract a younger, more diverse audience and that the UFC and ESPN audiences overlap significantly on both factors. 

The first table in our UFC / ESPN Partnership Scoreboard shows the SAP analysis for age and demonstrates that both the UFC audience and the ESPN audience are composed of a higher percentage of 24 year old and younger followers than the Twitter base audience. It also shows that the UFC and ESPN age profiles are very similar to each other across all demographics.

The second table in our UFC / ESPN Partnership Scoreboard shows the SAP analysis for ethnicity and demonstrates that both the UFC audience and the ESPN audience are composed of a higher percentage of Hispanic, African American, and Asian followers than the Twitter base audience. Once again, it also shows that the UFC and ESPN ethnicity profiles are very similar across all demographics.

The early results from UFC’s initial deal with ESPN already reflect the benefits of this new partnership. When UFC debuted on ESPN+ on January 19, 2019, ESPN signed up 568,000 new subscribers in its first two days while the total number of ESPN+ subscribers was 2 million at the time (that number today appears to be closer to 3 million). Critics of this success say that this number is still far lower than the 86 million ESPN subscribers the company had last year while ESPN has offered discounts to encourage UFC fans to sign up for the platform.

The final data point that can be used for this audience is scale. As seen in both tables, UFC has 6.9 million followers while ESPN has 33.8 million followers on Twitter. ESPN enables UFC to target the audience of its current follower profile at a much greater scale than the UFC can do on its own. Conversely, the UFC follower is also more likely to be ESPN’s watcher and subscriber than the average population. Having UFC content also should lead to an increase in ESPN viewership.

The critics demonstrate why it is important to analyze both the quality and quantity of an audience. As seen in both tables, UFC has 6.9 million followers while ESPN has 33.8 million followers on Twitter. ESPN enables UFC to target the audience of its current follower profile at a much greater scale than the UFC can do on its own (or through other Pay TV platforms as White alluded to in his earlier quote).

Conversely, the UFC follower is also more likely to be ESPN’s watcher and subscriber than the average population. Having the exclusive rights to UFC content will enable ESPN to monetize a new audience both in terms of monthly fees and PPV events making these 568,000 (and likely now more) UFC subscribers far more lucrative to ESPN than cable subscribers paying monthly fees. In addition, the UFC audience fit to ESPN makes it more likely that UFC fans will find value in other ESPN+ content while current ESPN+ subscribers obtain access to new content that likely will resonate with their preference.

ESPN, UFC demonstrates what a new partnership can look like as new distribution channels emerge for the sports industry. Organizations need to know and understand this to facilitate their decision-making process in ways that maximize new revenue growth.