UFC’s new exclusive pay-per-view deal with ESPN+, explained

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The UFC and ESPN announced a groundbreaking new distribution deal Monday, one that will greatly change the way consumers watch UFC pay-per-view events.

Beginning next month with UFC 236, all UFC PPV cards will only be available for purchase on the ESPN+ digital streaming service in the United States. Fans must subscribe to ESPN+ in order to buy pay-per-view cards, which will be slightly discounted from the norm. In addition, the UFC and ESPN extended their multi-billion dollar pact for two more years, until 2025.

Here’s a guide to what has changed, why it will be different moving forward and how it will affect the UFC, fighters and fans with exclusive quotes from UFC chief operating officer Lawrence Epstein.

How will this change the way fans in the U.S. view UFC PPV events?

Pretty drastically. UFC pay-per-view events will only be available for purchase on ESPN+ — and only after subscribing to the digital streaming service. That means you’ll no longer be able to flip to a channel on your television and purchase UFC PPV cards there. The only way you’ll be able to watch is on ESPN+, via the service’s browser view or its various applications.

How much more is this going to cost?

That depends on your current viewing patterns. An ESPN+ subscription costs $4.99 per month or a yearly rate of $49.99. Subscribing will gain you access to the monthly UFC pay-per-view events for purchase (in addition to the 20 UFC “fight night” cards ESPN+ is already airing and all the other sports on the platform). Those PPV cards will be $59.99, down from their current price of $64.99.

Will ESPN+ offer any kind of bundles or deals?

Yes. Right now, ESPN is offering new subscribers one year of ESPN+ and one UFC PPV event for the price of $79.99. That’s $30 more than the usual yearly price for ESPN+, which represents a discount of about $30 on one UFC pay-per-view card. UFC president Dana White said in an interview with Megan Olivi on the UFC YouTube page that there are more packages like that expected in the future.

How does this affect fans outside the United States?

It doesn’t. Every other country or region will maintain the same distribution deal. Even fans in countries that have pay-per-view, like Canada and Australia, will watch in the same way they always have.

What about watching at sports bars or restaurants?

That, too, will stay the same. The UFC has retained the rights to sell its PPV cards commercially, so fans can still go to Buffalo Wild Wings or the local sports bar to watch the fights. This could be very important for people who don’t have good internet connection in their area and are unable to stream ESPN+.

“As a part of this deal, we wanted to make sure that was still available to our fans,” Epstein said. “None of that should change.”

Why did the UFC do this?

That’s simple. Financially, it’s almost certainly a great deal for the UFC. ESPN will pay the UFC a “license fee” on the front end for the right to sell the promotion’s pay-per-view cards. And then, presumably, the UFC will still make a percentage in PPV revenue on the back end. It’s unclear what that percentage split will be between ESPN and the UFC and neither side will disclose it.

“We’re not commenting on any of the financial parts of this deal, but obviously they’re paying a license fee to us,” Epstein said.

With cable and satellite providers, the UFC reportedly got 50 percent of PPV revenue and was apparently angling for more, per reports. As recently as last month, the UFC was in dispute with DirecTV and its easy to imagine the move to ESPN+ has at least something to do with that.

Plus, the UFC gets to make ESPN its one-stop shop in the U.S. for just about all live programming, and getting even more cozy with the worldwide leader in sports is not a bad thing. For ESPN this is a no-brainer, because it gives UFC fans an even greater reason to sign up for ESPN+.

“This is just an opportunity that we just couldn’t pass up to fully align with ESPN and all the resources they have,” Epstein said. “The first 2-1/2 months, this relationship with ESPN has exceeded our expectations and I feel confident in saying it’s exceeded ESPN’s expectations. And so, we said, ‘Hey, we’re off to a great start, let’s make this thing bigger.’ It definitely wasn’t the plan, but I think just the momentum we got at the start of this relationship got us talking about this.”

Are there any other benefits for the UFC?

Yes. Data is a big thing that many fans don’t consider, but Epstein said that’s a key factor. There wasn’t much communication from cable and satellite operators on who was actually buying the fights and the UFC values that information, which it will get from ESPN, and believes it can apply it.

“[It gives] us more information to help us matchmake cards better, to figure out how to market — whether it’s merchandise, ticket sales, Fight Pass subscriptions,” Epstein said. “Whatever it is, getting more information so we can be more effective in the way we present our product is something that we’ve been thirsting for for years now.”

Isn’t it a risky proposition moving away from the traditional PPV model?

Sure. It increases the level of difficulty to purchase pay-per-view events and adds a whole new layer of pay wall for fans. The vast majority of fans currently watch PPV cards on their television via their cable or satellite provider. It seems obvious that, at least in the beginning, the UFC is not going to bring every single one of those people over to ESPN+. But execs believe the pros outweigh the cons, especially financially. Plus, the pact further entrenches the UFC with ESPN, which will be invested in providing the coverage on its cable networks to expose potential new fans to the UFC that these deals might scare away.

“Theoretically, I guess there is some risk,” Epstein said. “I think from a practical standpoint, the good news for us, particularly in the U.S., is that Netflix has broken down a lot of those barriers. And now with Hulu and so many other [over-the-top] products out there — and Amazon, another big one — the vast majority of people have become comfortable with consuming content on OTT platforms. So, this is clearly the future and it’s also the present. We don’t see the risk as being that great.”

How will this affect fighters who have pay-per-view points written into their contracts?

Unclear. Epstein would not comment on financial specifics of the deal or what it could mean for fighters who have it in their contracts that they make a portion of the pay-per-view revenue. There should probably be at least of some concern from those fighters and their representatives, though. The UFC is taking ESPN’s “license fee” on the front end — that fighters will very likely not directly see — and almost certainly taking a hit in the amount of money generated from pay-per-view buys. That PPV revenue is how many UFC champions and big stars make a huge chunk of their income. Again, it’s unclear what percentage the UFC will get on the back end on PPVs sold, but it’s hard to imagine fighters who get PPV points are in a better position now than they were before this deal.

What does this mean for UFC Fight Pass?

Good question. The UFC still has its own digital streaming service, but now will show fewer live UFC fights in the U.S. on that platform than it has since Fight Pass launched in late 2013. Much of the archived bouts on Fight Pass are also available now on ESPN+. The UFC, though, will note that there is plenty of other programming — including live and archived fights from 25 to 30 different promotions in multiple combat sports — and there is a commitment to adding even more original programming.

Plus, UFC Fight Pass is a global platform and the way some countries and regions view all UFC content. Epstein said UFC Fight Pass subscribers have actually increased in the first 2-1/2 months of the ESPN deal.

“I think part of that is due to just the much bigger exposure the UFC brand is getting [from ESPN] and that means more exposure for UFC Fight Pass also,” Epstein said.

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