The UFC Fight Pass vs. WWE Network – A Tale of Two Wildly Divergent Companies … Also Known as Injecting Some Sanity Into a Crazy Argument

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One of the amusing things to happen Wednesday night was that of the amusing arguments that broke out between MMA fans, pro wrestling fans and their respective media members when it came to the unveiling of the WWE Network. Having spent several years in development, and originally thought up as a potential television channel, the WWE unveiled their long in development web program Wednesday night in stark contrast to the UFC’s debut of its Fight Pass directly before UFC 168.

The key to take away from both presentations isn’t whether or not one is worth the money, and the other isn’t. Or whether or not grown men can embarrass themselves on Twitter discussing their love of fake tough guys pretending to beat each other up.

It’s the difference between one company that’s essentially abandoning the PPV market for a new web platform and another that still has skin in the game.

When you look at the UFC and its business model there’s still plenty of money to be made when it comes to PPV, et al. With the WWE, which as a public company has to publish their financial models, PPV is no longer a viable option. And that’s the inherent difference between the UFC and the WWE in terms of how its handling both of their online distribution networks right now. One doesn’t want to damage a significant money maker; the other is abandoning it for potentially larger profits through its own “network.”

Zuffa has a massive library of MMA, owning nearly every major promotional video library of note, but they have a business model that isn’t reliant on any one revenue model. They make money on PPV every single time they put a show on and have a Fox contract that makes them nine figures annually on just domestic revenues alone. Throw in a plethora of international broadcast arrangements as well and the UFC has plenty of money coming in.

The WWE has nearly the same, a nice USA contract buffering a number of international deals as well, but the one area that’s fallen apart (for any number of reasons) is PPV. The WWE only is able to really make a ton of revenue off of one event per year, Wrestlemania, and the rest of the year they tread water in that department. It’s been that way for a while, as well, for any number of reasons.

WWE is now a television company that dabbles in PPV for the most part right now. They have monthly PPV’s but it’s not a revenue generator for them anymore like it has been in the past. They make most of their money elsewhere and PPV isn’t something that fuels the WWE budget year in, year out. This is a calculated move to essentially shore up their PPV numbers by shifting it elsewhere. People aren’t buying a WWE PPV regularly for $55 every month or so, roughly.

Will people spend $120 annually for 11 of them per year, excluding ‘Mania? That’s more likely, based on cost alone. The stakes are higher for them, needing roughly 1 million subscribers to make it work as opposed to Fight Pass which is aiming for a significantly less number. This is the WWE making a huge gamble, hoping for a huge reward. The UFC Fight Pass by comparison isn’t nearly as contingent for Zuffa’s success as the WWE Network is going to be for Vince McMahon and the WWE.

This is the WWE setting a brushfire to their PPV business, something that still generates income but isn’t a huge portion of their income, hoping to be in front of the next big thing. This isn’t a desperate move by them … just one hoping to capitalize on one revenue stream that clearly isn’t working for one that could bring them massive ones. It’s a risk, one that could potentially backfire in extraordinary ways, but the PPV market for professional wrestling is nonexistent in 2014 and hasn’t been commercially viable for massive revenue gains outside of Wrestlemania once a year.

Zuffa’s Fight Pass is an attempt at satisfying hardcore fans with cards designed to grow the company internationally with time appropriate cards. It gives you access to their entire fight library, of course, but until pay per view stops being a significant and large revenue creator for them nothing on it will change. They don’t have to at the moment. They’re in a position of strength.