This tech innovation a pay-per-view game-changer? One regional promoter hopes so

To hear Go Fight Live CEO David Klarman tell it, the Cage Fury Fighting Championships event that took place in Atlantic City, N.J., earlier this month was mostly notable for what wasn’t there.

CFFC 43 marked the first time that the promotion, under its current ownership, had gone live with an actual, honest-to-goodness, buy-it-on-your-TV pay-per-view. But if you’d searched the arena and the parking lot at Borgata Hotel Casino & Spa that night, you’d have found no satellite truck, no fiber-optic hookup, nothing that usually accompanies a PPV broadcast at considerable expense.

“Just to get a satellite truck to a venue, even with the smaller ones, you’re looking at somewhere in the neighborhood of $5,000,” Klarman told MMAjunkie. “Then you have to pay for the satellite time.”

Before you know it, you’ve dropped $20,000 just to get your event to the PPV distributor, which, when you factor in other production costs associated with shooting and airing a live MMA event, means you’re already in the hole as a promoter.

That’s exactly why, when CFFC CEO Robert Haydak was approached by GFL with a plan to go live on PPV, he wasn’t terribly enthusiastic.

“I acquired the company after CFFC 7, and the last show the company did was a major pay-per-view event,” Haydak said. “They lost a considerable amount of money. Ultimately, it was the reason why they shut their doors.”

When Haydak began to rethink his anti-PPV stance was when GFL explained why this one would be different. Instead of using expensive satellite or fiber-optic technology, this PPV would travel from the venue to the provider – in this case, PPV supplier InDemand – entirely over the Internet.

Sounds fine at first. Then you think back to the last time you watched a live Internet stream of anything – UFC, Invicta FC, Metamoris, a view of the Earth from the International Space Station – and you quickly realize why it isn’t usually done this way.

The same way you might be hesitant to pay for a live stream that may or may not be marred by constant “buffering” messages or sudden, drastic changes in picture quality, when GFL claimed that it had a technological innovation that would allow it to send a PPV feed solely over the Internet, InDemand had similar concerns.

“The piece that I was most worried about was the stability,” said John Schultz, Vice President of Broadcast Operations for InDemand. “When you think about Internet feeds, or if you’re streaming something on your PC, you might see that buffering message or a slowdown based on your bandwidth. So if you’re taking a high-quality, high-bit-rate feed that’s coming from a venue to us … that was my concern. Will you see that buffering? Will you see issues, especially if it’s just on the Internet?”

According to Schultz, they saw none of that with the CFFC broadcast. That in itself was notable, he said, because the three main concerns with any PPV feed are “stability, quality, and security.”

Will the feed cut out suddenly? Will the picture be sharp and clear enough? Will a hacker be able to steal it off the Internet as it travels from the venue to the provider?

It’s one thing if an Internet stream is choppy or not totally reliable, Schultz said. But when paying for a PPV broadcast on TV, viewers expect total reliability. That’s likely one of the big things that still separates online PPVs and televised ones in the minds of consumers. It’s probably also why online PPVs don’t typically do as well. When buying a live Internet stream, there’s always the question of whether you’ll really get what you pay for, and in a form worth paying for.

“On the Internet, pay-per-view streams are still a novelty,” GFL’s Klarman said. “I can’t say it any different than that. It’s not mainstream. Even though people are going digital, they aren’t there yet. People are still buying on their TVs through their cable providers because they still believe that the quality of what they’re going to get is higher there than it is on their computers. So a CFFC event that would do X number of buys on the Internet, it does three times when it’s online and on InDemand as well. The opportunity is not just the opportunity to broadcast. It makes the product higher profile.”

According to InDemand representatives, they only felt comfortable with the technology after several months of tests to assure the quality and reliability of the feed. Once they gave GFL the go-ahead, GFL approached CFFC a few weeks before the Nov. 1 event about being the first ones to give it a try.

Prior to this, according to Haydak, his promotion contented itself mostly with online PPV or a two-week delay on Comcast SportsNet. Live TV seemed to be beyond their reach. But removing the high costs associated with breaking into PPV, he said, “made a tremendous difference.”

“I know the fighters appreciated it because of the exposure they get,” Haydak said. “It assists them financially, as well, because they’re able to go out and secure sponsors by saying, ‘Hey, we’re going to be live on all these households on TV.’ And for us, it’s increasing our brand awareness.”

The CFFC pay-per-view sold for $17.99 through InDemand, according to GFL. Because of the short notice, Haydak said, his promotion didn’t do much marketing for the PPV beforehand, and since figures on total buys weren’t available yet, he added, it was difficult to tell whether the event was a true success. But because of the low costs associated with it, CFFC didn’t necessarily need a ton of buys to make the endeavor worthwhile.

“If it’s done the right way, it can be a game-charger,” Haydak said. “I say that because, as regional promotions, the more money you can make, the more money the fighters are going to make. If we’re able to generate 5,000 or 10,000 pay-per-views on an event, that drastically increases our bottom line. The only thing that concerns me is, if it becomes so readily available, are we going to dilute the product?”

That’s just one of the questions to present itself in the wake of this innovation. While GFL insisted that beaming a PPV event live over the Internet also allows for an expansion of international TV rights deals, since they “can get it to Denver just as easily as we can get it to Paris or Rome, and the same quality,” other industry insiders MMAjunkie spoke to expressed skepticism that legitimate overseas TV networks would be willing to gamble on an Internet feed since all it takes is one outage or unforeseen connection problem to ruin that night’s programming.

When relying so heavily on the Internet as the primary delivery method, those sources said, too much is left to chance. It’s why most PPV providers insist on not just one satellite feed, but two, for the sake of redundancy. Using the Internet as both primary and backup source comes with no shortage of risks.

“You can have the world’s best, most advanced garden hose,” said one expert who spoke on the condition of anonymity, “but if a lawnmower runs over it, you’re going to have a leak.”

According to Haydak, CFFC sold rights fees to this event in Poland, as well as “a couple neighboring countries,” and has hopes of expanding that with future events. While rights fees for a regional MMA event may not draw huge payouts, he admitted, “it all adds up” for a local promoter looking to generate more revenue, which might in turn help him book a higher-profile main event for future installments.

As Klarman put it, “All of a sudden, there are no limitations. If you’re a Brazilian fighter on a card in the U.S. and a Brazilian network wants to get this card to broadcast it to your fans back home, typically that would be a couple satellite jumps or fiber costs, which are huge to Brazil, so that’s eliminating. But we can send them a piece of hardware, install it, test it, and when the event happens, boom, they have it.”

The change doesn’t matter so much to the PPV giants like the UFC or the WWE. When you’re doing hundreds of thousands of buys, it’s probably worth the extra peace of mind to pay for the satellite.

“But the smaller guys, that money’s not there,” Klarman said. “So they don’t ever have a chance, for the most part, to be live on television, and surely not to generate licensing fees. It’s one thing to be on InDemand as pay-per-view, and it’s another thing for networks overseas to pay a licensing fee to get the rights to certain content. The fact that the cost to deliver it is so low here, the licensing fee can be low. The threshold in order to make it financially viable is much lower than it would be if you had to cover $20,000 in costs for the broadcast. Most of these guys don’t have an extra $20,000.”

But there’s also the question of overall market saturation. With a UFC event almost every weekend, regional promoters could find themselves battling for a shrinking pool of available PPV dollars as fight fans pick and choose in a crowded marketplace.

A CFFC event might come at less than half the cost of a UFC event, but that doesn’t necessarily make it a good deal in the minds of fans who still prioritize the brand name they know over the ones they don’t.

Then again, if the costs of producing a PPV event are low enough, how many fans does a promoter really need in order to be convinced to give it a shot?

“If we’re able to go live, sell it in a few other countries,” Haydak said, “hey, that really adds a lot to our bottom line. It could change a lot of things for us.”