The Bottom Line: Rolling the Dice on the DAZN Rollout

Editor’s note: The views and opinions expressed below are those of the author and do not necessarily reflect the views of Sherdog.com, its affiliates and sponsors or its parent company, Evolve Media.

* * *
It hasn’t generated a great deal of conversation, but the next two weeks are likely to serve as a critical point for the financial future of combat sports. The DAZN over-the-top streaming subscription service has big aspirations in both mixed martial arts and boxing. Having spent massive sums of money to secure the rights to Bellator MMA and Eddie Hearn’s Matchroom Boxing, the next few weeks will go a long way towards settling whether that investment by DAZN was financially prudent and whether it is likely to be sustainable moving forward.

DAZN’s success or failure will depend upon the programming it puts on, and it is rolling out in a big way over the next two weekends. DAZN on Saturday will feature one of the biggest attractions in boxing, Anthony Joshua, as he takes on a dangerous opponent in Russian Alexander Povetkin. Then on Sept. 29, Bellator will put on one of its biggest fight cards yet featuring middleweight champion Gegard Mousasi against welterweight champion Rory MacDonald, as well as a continuation of the legendary blood feud between Quinton Jackson and Wanderlei Silva.

DAZN has thrown a lot of money at both Matchroom and Bellator. If that money keeps coming in, it has the potential to reshape both boxing and MMA. Matchroom could potentially compete more directly in America with stalwarts like Top Rank, Golden Boy and Premier Boxing Champions. Meanwhile, an infusion of cash into Bellator would mean more head-to-head competition with the Ultimate Fighting Championship for talent and likely increased paychecks for fighters in both organizations. The key, of course, is that the money needs to keep coming in. DAZN is spending big on the expectation that it will be able to generate large subscription numbers; if those numbers don’t come through, the whole enterprise won’t be sustainable.

DAZN is likely to increase its numbers gradually over time, but after the next two weeks, it’s going to have a very good idea of whether its business model makes sense. Over-the-top streaming is no longer a novelty, and it won’t take significant time for consumers to warm up to the technology. Moreover, DAZN is coming out strong with fights that big-time MMA and boxing fans aren’t going to want to miss. If these fights can’t move subscriptions, it’s hard to see what fights DAZN can put on that will.

It’s not hard to find examples of organizations that came into this space with big aspirations, only to quickly recognize their model wasn’t going to work. Al Haymon bought TV time with a host of television networks thinking he could take full control of American boxing. After running through tens of millions of dollars of investors’ money, PBC retreated back to a less ambitious model. In the streaming space, FloSports came out throwing large amounts of money to create a professional wrestling powerhouse, only to abruptly give up and enter into litigation with former partners. DAZN is unquestionably a gamble with big upside and also big downside.

Bellator is of course aware of this. DAZN had to ante up in a big way in order to get Bellator to link arms with a risky partner, just like the Ultimate Fighting Championship received more money from ESPN but has to grapple with the risk inherent in being tucked away on ESPN+. Bellator now has to put its best foot forward and hope that it can help build DAZN into the major power it aspires to be. Doing so would not only ensure that the same high rights fees continue to come in but also validate the value of Bellator’s programming at a time when its ratings have been consistently down.

Bellator has a key trump card when it comes to DAZN, and that is the fact that it is owned by Viacom. This television connection provides an easy home for Bellator’s DAZN-exclusive cards, should the DAZN arrangement end for whatever reason. That minimizes the risk of uncertainty that Bellator faces and allows Bellator to take risks when it comes to distribution. Still, Bellator is better off with tens of millions of dollars coming from DAZN and thus has every incentive to make this arrangement work.

To a significant degree, Bellator executives simply have to cross their fingers. Beyond the risk inherent to this entire venture, the enterprise will rise or fall much more on the basis of the boxing portion than the MMA portion. Joshua is a much bigger star than anyone Bellator has, and if boxing fans don’t sign up for DAZN, how Bellator performs is largely immaterial. Still, by debuting Bellator and boxing on separate weekends, the staggered signups will provide evidence of how important Bellator is relative to Matchroom Boxing.

It will take time for fans and media members to learn just how successful the DAZN rollout was. For those directly involved in the venture, however, the moment of reckoning rapidly approaches. There is little precedent on this scale for world-class, first-run, over-the-top MMA and boxing programming. The success or failure of this venture will not only shape the fortunes of the organizations involved but will influence the future distribution models for combat sports. These are a few weeks not lacking in consequence.

Todd Martin has written about mixed martial arts since 2002 for a variety of outlets, including CBSSports.com, SI.com, ESPN.com, the Los Angeles Times, MMApayout.com, Fight Magazine and Fighting Spirit Magazine. He has appeared on a number of radio stations, including ESPN affiliates in New York and Washington, D.C., and HDNet’s “Inside MMA” television show. In addition to his work at Sherdog.com, he does a weekly podcast with Wade Keller at PWTorch.com and blogs regularly at LaTimes.com. Todd received his BA from Vassar College in 2003 and JD from UCLA School of Law in 2007 and is a licensed attorney. He has covered UFC, Pride, Bellator, Affliction, IFL, WFA, Strikeforce, WEC and K-1 live events. He believes deeply in the power of MMA to heal the world and bring happiness to all of its people.