How ESPN was forced to change UFC business strategy after aggressive PPV pricing "jacked up" piracy numbers
ESPN's decision to dramatically increase the pay-per-view price for UFC fights has led to a shift in marketing strategy following reported surges in piracy, the latter of which TKO president and COO Mark Shapiro believes was a response to the said price increase.
To combat the rise in piracy due, reportedly, to the higher pay-per-view price, a more slow-burn approach was offered. Now, fans are offered a discounted price if they pre-order pay-per-views ahead of time, but only before a certain date, after which the pay-per-view price increases. Shapiro said:
"Look, ESPN and Disney were very aggressive, if you will, on pricing the pay-per-view. I mean, and they have full control over that. I mean, we have input, but they have control given what they're paying us for those rights. So, over the period of our partnership, as you asked, they probably went a little quicker and a little higher than we would have liked. We voiced that to them, especially in this kind of era of piracy, where we're seeing our piracy numbers really jacked up."
So, while the UFC wasn't necessarily against the idea of increasing their pay-per-view fees, the rate at which it was done was quicker than they thought necessary. Shapiro further added:
"And we think that's driven by them pricing it too high. So, they were very receptive to that feedback. We had a meeting in Las Vegas a few months ago with Jimmy Pataro and Dana [White], and they took their price down, if you will, in terms of offering a new marketing promotion, where if you buy by a certain date, well in advance of the numbered fights, you were going to get a discount, and then the price, of course, increases once you pass that date."
Check out TKO president and COO Mark Shapiro talk about business strategy:
Ultimately, a resolution was reached about the price increase and the promotion has continued to enjoy tremendous financial success.
The ESPN-UFC partnership began in 2019
ESPN reached a United States media rights agreement with the UFC in 2018, after the promotion's deal with the now-defunct 21st Century Fox neared its expiration date. The new deal came into effect at the start of 2019 and the UFC hasn't looked back since.
Check out Dana White and Megan Olivi talk about the ESPN deal:
Unfortunately, the deal hasn't been perfect, with numerous fans since having complained about technical issues while watching pay-per-views streaming on ESPN+, despite the string of financial success.