Does PPV have a place in the future of streaming?

In a shock move out of the US, UFC, home of the modern Mixed Martial Arts (MMA) fighting scene, signed a deal worth $7.7bn to stream its bouts exclusively on Paramount+. This follows a wider trend of sports rights being moved across from traditional broadcasters to the digitally native streaming services, such as Netflix recently starting to broadcast WWE wrestling matches on its platform. 

It’s not just the platform causing excitement, the big shake-up comes as Paramount+ announces that they will stop broadcasting UFC matches under a pay-per-view (PPV) system, as they had done since the late 90s. 

This means users can access live matches as a part of the regular package of content available on the platform. With the trend towards streaming and instantly accessible content, could we be witnessing the death of PPV?

A place in the age of streaming?

PPV is a widely accepted method of consuming premium content, but as a result of its cost it has limitations. Firstly, we see a huge reduction in accessibility and affordability for casual audiences. And as a result acquiring new fans of a sport can be difficult, with the initial barrier to entry preventing access particularly to younger and lower-income audiences. 

Not every viewer can afford to cough up for every single headline match, so sports associated with PPV can remain fringe and not enter into the mainstream to the same extent. Sports like football and rugby would never put themselves behind a pay-per-view barrier; as they are so embedded in culture that doing so would be unthinkable. Newer sports may need to adopt the same approach if they want to reach bigger audiences

The power of PPV 

While limitations remain in the use of PPV, there are other less-considered advantages. The greater buy-in from audiences, as a result of a financial downpayment, can create a huge level of loyalty, with many viewers tuning into every single match. 

In many ways, access to a PPV match can feel closer to a ticket to a live sporting match than simply watching on TV. This premium experience creates a level of community that only niche sports can give, and weeds out the more casual fans from the true fanatics. For instance, a football fan might watch the Sunday fixture with their phone in one hand, yet a UFC-watcher who has paid for entry is fully engaged from start to finish. 

Beyond sport, the use of PPV for the latest film releases or niche content can give streamers the chance to offer even more content, without expensive licensing deals, to create a world of content choices in one place. 

Experience over everything 

So, which model is the best for keeping audiences engaged and which is best for growing reach?

Overall consumers want a simple, and affordable system that gives access to the content that feels like value for money. We recently commissioned a survey of 1,000 subscribers from Hanover Research that found 90% stated “value” as a top reason for signing up for a subscription - the highest of any reason. This makes sense in a time of cost-cutting and increased economic pressure. 

Additional fees that seem to block access to existing content can leave consumers with a bitter taste in their mouth, and risks sending them elsewhere for the content they love. PPV may act as a short-term revenue driver, but it can be self-limiting as it prevents rapid growth and limits retention. 

In the short term, Paramount will likely see an influx of die-hard UFC fans as the content migrates across, but retaining them is not as simple as providing content. Building loyalty is about drawing attention to every point of value that your subscribers are entitled to. 

Quality content beyond their love of UFC will keep customers paying each month, not to mention the wider reach to shared household watchers, who may not be as keen on MMA fighting, but would enjoy TV shows like Star Trek: Discovery or South Park. This spread of content gives a wider appeal to UFC fans and non-fans alike, with accessibility now improved thanks to the end of PPV. 

How sports fans access their content is changing in the era of streaming, and the end of PPV seems like a natural consequence of this digital revolution. 

Markus Schmaus is VP for EMEA at Recurly