What does UFC bring to ESPN? Former UFC exec and current GLORY CEO weighs in

As a former UFC executive vice president and current CEO of the GLORY kickboxing promotion, Marshall Zelaznik has seen the fight business from a few different angles. He also happens to have some unique insights on the UFC’s new deal to stream live events on ESPN+ beginning in 2019.

At the UFC, Zelaznik helped develop the Fight Pass streaming service. With GLORY, he leads a promotion that has both a streaming deal with Fight Pass and a broadcast deal with ESPN.

Recently MMAjunkie spoke to Zelaznik to get his thoughts on the UFC’s move to ESPN+, and what it could mean for Fight Pass streaming partners, as well as fight fans. (This conversation has been edited for length and clarity.)

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MMAjunkie: You were involved very early on with the UFC’s streaming efforts through Fight Pass. Were you surprised at the news of the streaming deal with ESPN, or was this something you guys had your eye on back when you worked for the UFC?

Zelaznik: I expected there to be a deal with a digital streaming partner. I think the thing that was, well, not a surprise, because I always expected the UFC to come out of the FOX deal in a strong negotiating position, … but it was that they were able to get this deal done within a matter of months of (major changes in executive leadership at ESPN). And getting that kind of commitment from a network with that kind of change in executive leadership, I think that speaks to the power of what the UFC is.

For me, maybe the biggest surprise was the amount of money that’s being paid. I have no doubt that the UFC brings that kind of value to an over-the-top platform, because, remember, we launched Fight Pass, so I know what it’s capable of. But somebody did a very good job in the negotiation of that deal to get ESPN up to speed on the value there, and I think the content’s worth what they’re getting paid for it, and it was good to see in a lot of ways. It’s good for the entire combat sports industry.

A lot of people have focused on that $150 million per year price. When you calculate how many $5 a month ESPN+ subscriptions you need to sell to make that back, it seems like a lot of people are skeptical that ESPN can do that. I’ve seen the term “loss leader” thrown around to describe how ESPN might be viewing the UFC as a streaming product. Do you think that’s accurate?

Gosh, a loss leader? I mean, to the extent the NFL was a loss leader for FOX, if you want to call that a loss leader, then maybe I can accept that. I think this is a good bet for ESPN. I think fight sports generally are a good bet.

If you can build stars and get people to care, you can move an audience very effectively with this kind of product. If you’re a company that’s tried to build a subscriber base and create consistency and avoid churn and keep a fanaticism associated with this, there’s probably not a better product in the combat sports space than the UFC in order to do that, just because of the consistency they bring.

How do GLORY’s separate deals with Fight Pass and ESPN work?

Our events are broken down much like the UFC’s. Our middle prelims we call the super fight series, where we take unique care to promote fights that we think make sense for developing talent, and then we have the main card, which we call our numbered series. I did the deal for GLORY when I was with Fight Pass for the super fight series, because GLORY had a deal with ESPN for the numbered series. So the main card sits with ESPN and the middle prelims sit with Fight Pass.

If the UFC moves 15 events per year, as well as its fight library over to ESPN+, which right now is about half the price of Fight Pass, are you worried that fans will drop Fight Pass? What will that mean, not just for GLORY, but for promotions like Invicta FC or the Eddie Bravo Invitational, events that might not have another path to combat sports fans right now outside of Fight Pass?

I think that’s a good question. I think it’s an unknown right now, especially in terms of what it means for Fight Pass customers in the U.S. And I don’t have any inside information on this. I only know what I read, the same as everybody else, and it looks to me like they’re either going to retail Fight Pass through ESPN, and then maybe there’s an adjustment in pricing, you never know.

But one thing that’s important to remember about Fight Pass is that it’s an international product. There’s a lot of traction with the product internationally. And from market to market, and this was one of the challenges with Fight Pass in managing it, is that it looks different in almost every market around the world in terms of what live content and what delayed content you’re getting, just because of the different license fee deals you may do.

So yeah, while it’s a little ambiguous right now trying to figure out the value proposition of Fight Pass under this deal, it is something I’m watching very closely. Because we’re on Fight Pass, so we’re watching very closely to get some clarity in terms of what this will mean for us and what kind of audience we’ll still be able to drive to our events on Fight Pass.

It seems like everyone wants their own streaming service these days, but is there not a risk for networks and sports properties, not to mention everyone from YouTube to Netflix, that we’re rocketing toward a saturation point? There must come some point where consumers will feel like they’re being asked to shell out for too many different streaming services, right?

I think it’s twofold. One, I do think there’s a risk that we’re creating a bunch of segmented and segregated fans who subscribe to some things and not others. The beauty of the bundle, or what we’d call the cable bundle in the old days, is you could channel surf and discover other stuff that you might like. And in a world where it’s now so easy to segment interest, you end up preaching to the converted. This is also a political, social comment in some ways, but you end up just getting return information on what you already like, rather than expanding your interests.

I do think there is a risk, and you can imagine a scenario where this changes, but the risk is that someone has five or six different streaming subscriptions, and no one wants to go from one app to another, close this app, open that app, log in again, find their content, and have to do that on their TV and then all their other devices. So at some point someone’s going to aggregate these things – and Amazon’s trying to do it with Amazon Channels, where you can subscribe to HBO and Showtime and you don’t have to leave the Amazon app to watch all that stuff. That is critical in terms of user experience.

So as these groups build their own video platforms, somewhere along the way the consumer is going to potentially pay more in the long run and not end up with a good user experience. Then you can’t help but wonder if some day there’s going to be a new bundle that will bring a bunch of different streaming services together and pay one subscriber fee, do all the marketing and promotion, and put it all in one place.

So reinventing the cable TV bundle model, basically, but for streaming apps.

That’s what it could potentially lead to. And that’s how cable got started. You had people who had these regional sports channels, then a national broadcaster took it and started to build on it. I do think Amazon is one of these forward-thinkers, and that’s why they have the channel strategy that they have. They want you to be able to watch everything on their platform, and over time they will look to bundle this stuff together. I don’t know that for a fact, it’s me speculating, but I can see it coming.

What’s the main value that you think the UFC brings to ESPN, particularly in this instance, with a new streaming service that it’s trying to get going. Is it the audience? Is it the sheer volume of content?

It’s a great question. I think it applies to more than just the UFC. I’d put GLORY in there, and I’d put boxing in there. But generationally, people who are combat sports fans have been trained through big boxing pay-per-views, through the UFC, and frankly through WWE, that for good fight content, you have to pay for it. So philosophically, people know they have to pay for big fights.

Then you’ve got a really loyal and committed fan base that really does have an insatiable appetite to consume fights. And the last thing is, with the power of ESPN to promote and build stars, if you can build more Conor McGregors and Manny Pacquiaos, you put one big fight on ESPN+, and you will move the needle on that business. That’s what ESPN can bring.

And with the marketing power of the promoter, the ability for ESPN to reach an audience, you can create a compelling case for why this is more valuable than anything else in terms of creating a transactional product. For me, the big part of that is the way the audience has been trained that, the big stuff is stuff you pay for.

But this focus on creating so much content, and on spreading it around across multiple platforms, is there not a risk that a promotion like the UFC will spread itself too thin? If that happens, and if it’s all just another Saturday night of content, how do you build those big stars? Do you have to choose between building to those big fights and steadily churning out content?

It’s a really valid point. Because the moment someone stops watching because they don’t think they need to anymore, it’s really hard to get them back. So what will drive someone to stop watching? I do think saturation is an issue for any product. I don’t know that you have to choose, but I do think there’s a balance. You can have consistency and a regular product, and you can have those peak moments where you have the big event. I don’t think it’s realistic to think every moment will be big.

With GLORY, we do 14 events a year, so in our position it’s very important to have consistent content, so that people can experience and discover it. Then when the big fights happen, you have the platform to promote it. That’s what WWE’s “Raw” and “Smackdown” was doing back in the day. Get people interested, build up the pay-per-view, then wham, hit them with the big show. It’s a model the WWE perfected. The UFC was very similar, but everything changed with Spike. You had these shows, whether it was “The Ultimate Fighter” or (Fight Night) events, you were able to build stars.

But can you have oversaturation that creates too much noise? One hundred percent. If it’s the 35th fight and people are going, ‘Well, I don’t need to see this one,’ that can become a dangerous trend. Pretty soon they’re no longer fans. That’s the risk with any promotion.

Whether it’s pay-per-view or ESPN+ or Fight Pass, there are those transactional moments where there’s a question to ask. Will this hurt your audience? Will this help you build your audience? Is this short-term value or long-term value? The people at the UFC who are still there are very smart, and they can do analytics. But this is the art. This isn’t a science at that point, and these are artistic decisions that are being made.

For more on the UFC’s upcoming schedule, check out the UFC Rumors section of the site.

Source: USA Today – MMA Junkie

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