Bellator Fighting Championship Mixed martial arts (MMA) Promotion

Bellator Fighting Championships is an American mixed martial arts (MMA) promotion based in California. It is an organisation which has some of the best fighters from around the world, and is led by promoter Scott Coker. Bellator is available to nearly 500 million homes worldwide in over 140 countries. In the United States, Bellator can be seen on Spike, the MMA television leader. The word "Bellator" means "warrior" in latin.

History

Founded in 2008 by Bjorn Rebney the company was accquired by Viacom, Inc. in 2011 and is currently the world's second largest MMA promotion. Bellator airs live on Spike, and made its debut back in 2013. It has managed to reach 100 million homes weekly since its inception.

External Analysis

When conducting an external analysis a number of different frameworks were utilised including; Porters Five Forces, Target Market Selection and a Positioning Matrix.

Porters Five Forces

Competitive Rivalry

  • High pressure
  • Competitive rivalry represents Bellator’s most significant pressure point. The organisations main competitor and largest MMA promotion, the Ultimate Fighting Championship, is the most recognizable brand name and has the most famous athletes in the sport.

Buyer Power

  • High pressure
  • Every service offered by Bellator is an elastic product this leaves the risk that any change in a consumer’s income or Bellator’s prices could result in a decrease in the attractiveness in the products offered by the promotion.

Threat of Substitution

  • Medium pressure
  • Currently boxing represents the most suitable substitute for MMA fans. Recent trends have shown however, that MMA is much more popular than boxing amongst the younger community.

Threat of New Entry

  • Low pressure
  • Breaking into the MMA promotion industry requires significant amounts of capital and name recognition; threat of new entry represents a low point of pressure for Bellator due to these barriers.

Supplier Power

  • Due to unforeseen circumstances there was no available information on supplier power.

PEST Analysis

Political

A major political issue currently facing Bellator and the MMA industry is the number of restrictions from local and federal governments, both in the United States and overseas.

Economical

Being an elastic product any major economic downturn could have substantial impact. The recent change in the European Union has yet to be fully felt and may lead to future economic trends not just in the MMA industry but the global economy.

Social

Recent trans has indicated MMA is fast becoming one of the world’s largest sports, with ESPN ranking it in the top 15 sports globally. MMA has also witnessed a massive growth in the under 30 population, most notably in the United Kingdom and Canada.

Technological/ Disruptive Innovations

New technological innovations in the viewing patterns of consumers will greatly affect the MMA industry. This includes the internet due to its speed of access and smart phones being much more portable than past generations.

In the most recent years the MMA industry has been subject to two major disruptive innovations firstly the internet and secondly the rise in augmented reality software.

The internet has primarily changed the distribution of material in the MMA industry and has massively increased the ease of communication between fans.

Augmented reality, the blending of both physical and digital worlds on a smart device, has recently been tested in some organisations as useful tools. Many MMA gyms have begun to incorporate this technology to assist in training methods while some MMA promotors have used the technology to provide a more interactive experience with its end users.

Target Market Segmentation/Competing Factors

Currently Bellator employs a product specialization strategy when examining how the company interacts and markets to consumers. Going forward it would be more advisable for the promotion to adapt to a market specialization strategy. The recommendations below will demonstrate how going forward Bellator must seek to blend its online and offline capabilities to offer a more compressive list of services to a wider market.

Opportunities and Challenges

Opportunities

Untapped Markets

A major opportunity for Bellator and the MMA industry is the recent explosion of popularity in yet untapped markets of South America and Europe. In South America, Mexico and Brazil represents significant opportunities due to the high number of athletes originating in these countries and the little number of promotions. In Europe and specifically the United Kingdom, MMA has become one of the most popular sports for millennials. With only local organisations and international promotions holding few events, this is a prime opportunity for Bellator who are trying to build brand recognition in a market already over saturated with MMA promotions in the United States.

Online Streaming

Another opportunity Bellator is poised to take advantage of is the rise in online streaming. While the traditional platform has been pay-per-view model, trends have been shown that, especially with the younger generation, online streaming is becoming a more used platform. This is due to its convenience , it's 24-hour access and the high prices that most MMA promotions charge for live events.

Financials

Market

Currently the global MMA industry is a multibillion dollar market however, this is mostly due to the UFC which is valued at $4.2 billion.

Financing Options

There are two financing options that the new strategy seeks to utilise.

1. Being a subsidiary of Viacom Bellator has access to huge amounts of capital as Viacom is one of the world’s largest corporations.

2. The second financing option is in the proposed consortium, where multiple firms will pool capital together for combined growth.

Current Financial Situation

Currently Bellator is valued at $100 million after its acquisition by Viacom.

Challenges

Competition with UFC

A major challenge facing Bellator is the size and scope of its largest competitor, the UFC. If the UFC decides to start buying smaller firms this could cause a near monopoly in the market. If this is done the UFC could come close to owning 49% of the MMA market and place barriers of entry for other firms.

Legal Challenges

Another challenge facing the MMA industry is the legal restrictions it constantly faces from multiple governments both in the United States and some European countries. While there has been some success in this area with recent lifting of sanctions in New York, France has introduced a full country wide ban. This could pose a serious problem for any MMA promotion seeking to enter new markets or risks of existing markets.

Recommendations

The following recommendations are based on an overall long term vision of Bellator rapidly increasing its market share in the mixed martial arts industry and replacing the UFC as the world's leading MMA promotion.

Recommendation One - Increase Product Richness

The first strategic recommendation is to design and offer an online consumer subscription service. This subscription will provide members with multiple offer such as:

  • Live streaming of events
  • Access to archived material
  • Forum access to a community of other subscribers

This will initially be implemented in the United States for a subscription service fee of $5.99 per month, with plans to expand into South America, Canada and Europe within two years. The short-term aim is to have this service on the market within six months of initial development and to have gained 5,000 paying subscribers within the first year. With an ambitious long term goal of a 25% annual growth rate.

If this recommendation is implemented efficiently and effectively it will position Bellator as an early adopter in the innovation adoption cycle.

Recommendation Two - Increase Affiliations

The second recommendation is to increase the number of affiliated firms through the construction of a consortium with several other MMA promotions. Creating a consortium of several firms will include the implementation of a private industrial network. This industrial network will be used by all firms for combined, sustainable market growth and will provide all affiliated companies opportunities to share information. Within the first year the goal is to have formed partnerships with the three-other major national promotions:

  • One Championship, based in Singapore
  • World Series of Fighting, based in the United States
  • Invicta FC, based in the United States

This also has the built-in consumer value of offering fans content from multiple MMA organisations. This recommendation is of vital importance as it will increase the reach of the firm and its service capabilities and with the combined content of multiple organisations and Bellator's capital capabilities it will be possible for the promotion to replace the UFC as the world’s leading MMA brand.

Recommendation Three - Increase Reach

The third strategic recommendation is to found and sponsor a chain of franchised Bellator gyms. The projected goal is to have these gyms operate with as little administrative staff as possible and primarily use its online platform for subscriptions and support. The gyms will have a $17.99 a month subscription fee and can be easily joined through the same channels as the online streaming service. The initial aim is to open three gyms within the first year in:

  • Albuquerque, New Mexico
  • New York, New York
  • Las Vegas, Nevada

After the first-year, plans have been designed for expansion into the following three cities:

  • Montreal, Canada
  • Rio De Janerio, Brazil
  • Manchester, England

This recommendation has a unique opportunity of blending online and offline activities, offering consumers additional complimentary value and offering the firm substantial lock in benefits.

Justifications

Consumer Benefits

The traditional model currently used by Bellator has so far proven effective at providing consumers with basic benefits/value such as functional, hedonic and in some cases, aesthetic benefits. The new strategy seeks to build on this and provide the consumer with a fuller, more comprehensive experience.

Epistemic Benefits

The new subscription service will be very useful in providing customers with a sense of knowledge fulfillment, both curiosity and novelty seeking demands being fulfilled simultaneously. Currently some fans do not pay for pay-per-view events which can leave a gap in their curiosity which the live streaming service will perfectly rectify.

Social/Holistic Benefits

Consumers will be able to experience social benefits from the recommended new online forum and franchised gyms Thus giving fans a sense of connectives and community.

The first and second recommendation combined will provide consumers with a measurement of holistic benefits due to the complementary nature of the proposed strategies.

Situational Benefits

As the new recommendations are to be implemented on a 24/7 bases this gives all consumers, who subscribe to any package, great situational benefits being able to access content anytime and anyplace.

Value Proposition

To examine the value offered to customers in the new strategies, the Ammit & Zott model will be used. As seen below:

Novelty

  • A library of past events and other material will be available to subscribers.
  • This service will be accessible at any time, at any place.

Lock-in

  • Subscriptions costs will provide consumers with a lock in affect and in turn provide Bellator with a dependable stream of revenue.
  • Product customization will provide both a lock in affect and a sense of novelty for consumers.

Complementaries

  • A major complimentary the strategy provides is the connectivity between services e.g. the live streaming and the franchise gyms.
  • Another complimentary that will be offered is the potential for fans to train with their favorite athletes at the sponsored gyms.

Efficiency

  • Being online, interactive and available at any time this provides consumers with the most amount of efficiency at the minimal amount of cost.
  • All services and product offered will be available from the same platform.

Underpinning Theory

Porters Five Forces Analysis

During initial analysis, the chosen strategic tool used was Porters Five Forces Framework (Porter, 1998). This framework Gives its user a clear overview of where power lies in an organisation. Since its inception in the late 1990’s Porters Five Forces framework has become a benchmark and an industry standard from organisational analysis.

Porters Generic Strategy Model

When deciding on a strategic direction Michael Porters Generic Strategy model was employed (Porter, 1980). This theory indicates two methods an organisation can pursue when formulating its strategic direction, cost leadership and product differentiation.

Change Management

The recommendations contain the risk of alienating existing customers and employees, to combat this a change management strategy will be implemented making use of Kurt Lewin’s change management theory (Lewin, 1947).

Value Network Organisation

The recommendation to increase business affiliation was designed using the Value Network Framework. This new model expands on the traditional value chain to show how modern organisation need to be more dynamic, robust and a member of a larger value network with various organisations.

Consumer Values & Benefits

For analyzing what consumer benefits the new strategy will afford, the Consumer/Product Valuation Framework was utilized. This theory gives its users an in-depth analysis on how consumer values directly translate to product benefits (Clawson and Vinson, 1978).

Amit & Zott Sources of Value Creation

For determining the specific value created by the new strategy the Amit & Zott sources of value creation model has been utilized. This model analyses the sources of value creation from the perspective of either internal or external stakeholders (Amit & Zott, 2001).

Technology Adoption Lifecycle

When forming the specific methods for the first recommendation, offering a live streaming service, it proved useful analyzing the strategy using Everett Rogers bell curve model (Rogers, 1995).

Critical Appraisal

Drawbacks, Risks & Threats

The most significant criticism the proposed strategy can garner is the extreme levels of initial capital outlay that is required. All three recommendations rely heavily on Bellator having access to Viacom’s mass amounts of money. There remains the possibility that the new services do not catch on as rapidly or in large enough number as forecasted, if this is the case it might be difficult to notice until too late and result in major sunk costs.

A major threat for this strategy is that it can be implemented by other organisations. While it does have large capital requirements, this would be a problem that the UFC would not be hindered by due to the size of the rival promotion. The only hedge against this is that the UFC has many fighters who have pay per view contracts, meaning if the company was to implement this it would cause some destress amongst their biggest athletes.

A potential risk associated with this strategy comes from the plan to found a consortium. While this does offer many advantages for all firms involved it also carry’s the risk of diluting the Bellator brand name. The most detrimental outcome of this scenario is that fans focus on the promotions as a collective organisation instead of individual firms.

Competitive Advantages

If the above recommendations are implemented correctly this will put Bellator in a unique position to be a technological/social leader in the MMA promotion industry. By providing a live streaming subscription service the company will be positioned to attract customers that its main rivals (UFC) cannot. This competitive advantage will utilize Porters generic strategies, opting for a product differentiation approach.

References

AMIT, R. and ZOTT, C. (2001) Strategic Management Journal. Available at: https://www.uazuay.edu.ec/bibliotecas/e-business/Value_Creation_in_E-Business.pdf (Accessed: 2 December 2016).

Christensen, C.M. and Raynor, M.E. (2003) The innovator’s solution: Creating and sustaining successful growth. 5th edn. Boston, MA: Harvard Business School Press.

Clawson, J.C. and Vinson, D.E. (1978) Human values: A historical and Interdisciplinary analysis by C. Joseph Clawson and Donald E. Vinson. Available at: http://www.acrwebsite.org/volumes/9454/volumes/v05/NA-05 (Accessed: 12 October 2016)

Porter, M.E. (1980) Competitive strategy: Techniques for analyzing industries and competitors. 16th edn. New York, NY: Free Press [u.a.].

Porter, M.E. (1998) On competition. 11th edn. Boston, MA: Harvard Businesss School Publishing.

Rogers, E.M. (1995) Diffusion of innovations. 4th edn. New York, NY [u. a.]: Free Press.

Credits:

Created with images by MartialArtsNomad.com - "Jacen Brooks vs Ash Mashregi" • MartialArtsNomad.com - "MMA Cage" • blondinrikard - "MMA" • MartialArtsNomad.com - "MMA Fight" • MartialArtsNomad.com - "MMA fighter after loss" • mikepesh - "mma bjj jiujitsu" • StefanoPepe - "MMA" • MartialArtsNomad.com - "Sarah Macleod vs Olesha Karrington"

Made with Adobe Slate

Make your words and images move.

Get Slate

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a Copyright Violation, please follow Section 17 in the Terms of Use.