iddleweight mixed martial artist Chael Sonnen is a businessman: “You tell Anderson Silva I’m comin’ over. I’m kickin’ in his back door and I’m pattin’ his old lady on the ass and I’m tellin’ her to make me a steak. Medium rare, just how I like it.”

After just barely losing to UFC Middleweight Champion Anderson Silva, Chael wanted his rematch. He spent a year winning matches and talking trash until finally, at UFC 148 in July 2012, he got it. And one million people paid to see it–the highest PPV buyrate for the UFC since 2010. There are championship bouts and rematches all the time in UFC, so why was UFC 148 so damn financially successful? Well, there are a handful of factors that come together to create a perfect storm like UFC 148.

Anderson Silva was arguably the best pound-for-pound fighter in the world and hadn’t lost a fight in six years. Chael Sonnen was the guy who had come closest to beating him. Their first match was considered one of the greats. It was a championship rematch with two years of anticipation.

But just as important as the in-ring action, the hyper-charismatic Chael Sonnen talks trash and stirs up hype like no one else in the business. Going after everyone from Anderson’s manager to his entire home country of Brazil, Chael made sure “this time… it was personal” as the boxing promoter’s cliché goes. He pushed and prodded the mild-mannered Anderson to go off on an uncharacteristic tirade in the days leading up to the fight. Even if you hated Chael, he was so damned entertaining you couldn’t help but not listen to him talk.

UFC made sure you knew each and every one of these points. Every free television show they did, every advertisement they ran, had clips of the men fighting and talking, telling the story of the upcoming match. It was their job to get people excited enough to part with their money, and by all accounts they succeeded. It was the fundamental aspects of high-level competition, emotional investment, and promotion all rolled together in textbook fashion. Chael Sonnen is a promoter’s wet dream: a world class fighter who understands the business of promoting fights. So it’s no surprise he’s slated for another title fight in April 2013.

Yes, despite all the MMA talk, you’re still at ESFIWorld.com. Independent commercial e-sports leagues continue to toy with adopting, at some level, a PPV model for themselves–the same model the UFC employs. And even disregarding whether PPV is right for e-sports, there are lessons to be learned from the ascension of a new league in its climb as a company struggling to stay alive to a company with a market value of over one billion dollars. Although e-sports is something unlike anything else in the world, there are strong similarities between it and combat sports that deserve examination if e-sports is to grow both in popularity and financially.

It’s important at this point to note that this series is directed towards independent, profit-seeking leagues that are looking to increase revenue for themselves and their players. There are plenty of events and communities that aren’t interested in making a lot of money, and there’s nothing wrong with that. Similarly, publisher-run competitions are essentially infomercials for their games–that is, the events aren’t their product, but a commercial for their product (the video game). There’s nothing wrong with that either, but it should be known that–taken in a vacuum–Valve’s The International and Riot’s Season Championship don’t generate a profit.

NFL vs. UFC

Comparing e-sports to the NFL or MLB, simply put, is way off base.

First, let’s get something out of the way. The television ratings of traditional sports are typically used as a measuring stick in discussions of whether or not e-sports can be as successful. The truth is it’s likely that e-sports will always be a niche product. When people reach that conclusion it can be disheartening, but what should be realized is that, by comparison, UFC is also a niche product. UFC’s free shows averaged 1.7 million viewers on Spike in its most popular slot. (The numbers are even lower today on Fox’s networks.) By comparison, in 2011, the average NFL game was watched by 17.5 million viewers. When you extrapolate that out to five (or more) games broadcast a week in each market, you see what a behemoth mainstream sports is. But to be wildly financially successful, the UFC didn’t have to pull NFL-level ratings. It just had to create a great product and convince several hundred thousand people to pay for it twelve times a year. A big part of that equation is emotional investment.

Traditional team sports have the advantage of drawing emotional investment through built-in, location-based allegiances. E-sports doesn’t have that location-based advantage. Many competitors come out of the same regions, those competitors (typically) don’t always “represent” that region, and they are active for significantly shorter amounts of time than a team. So this means emotional investment in competitors is made through fans emotionally connecting to particular competitors (and their narratives) in a positive or negative way–and that starts with getting to know the players (or the persona they choose to project in the e-sports sphere).

Photo: Carlton Beener

As we’ll talk about later, typically a handful of successful competitors receive the lion’s share of fan interest–these are your stars. There is nowhere near enough interest outside of these stars to support a protracted regular season as you would see in the NBA. Similarly, there is generally much less interest in early stage play in weekend tournaments as opposed to in the final rounds. There’s no question that low-level competition is necessary, but in an industry that has yet to see a North American organization more than break even, you have to wonder what purpose is served in drawing out a new tournament or season for every solitary championship match. There are a whole host of other problems with holding single-weekend tournaments we’ll get into later in the week.

Combat sports face many of these same issues and UFC learned these lessons in a hard way. So let’s follow the evolution of the UFC. UFC 1 occurred in 1993 as an eight-man tournament, the hook being that the best martial art would prevail. The selling point was the excitement of the fights (and, of course, the unrestrained violence). By UFC 5 in 1995, they experimented with their first “superfight” between two fighters who had established superiority in the UFC and a rivalry between the two which served to promote the fight. The promoters had realized that fans becoming emotionally invested in these personalities and the story/rivalry surrounding them would sell the event just as well as, if not better than, a tournament.

Photo: Carlton Beener

The money and interest from fans proved this, as UFC 5 became by far the most successful event for UFC up to that point. By 1998 the tournament format had been abandoned entirely in favor of only superfights. Four years later at UFC 40, after the UFC had previously been struggling, the business began its turnaround thanks to a rivalry that was heavily promoted using the extreme animosity, great matches, and big personalities of Ken Shamrock and Tito Ortiz. The result was high amounts of emotional investment and buzz that expanded the fan base. The rest, in terms of success for the UFC, is history. And if UFC had continued to be simply a promotion holding essentially one-off tournaments, it most likely would not be around today.

The tournaments of UFC 1 through 16 are in some ways similar to what North American e-sports leagues are promoting today. Every time a new tournament begins, by-and-large, the results of the previous tournament have little effect on the results and narrative of the next tournament. You might luck into a matchup some time that feeds into an existing narrative, but here’s the key when it comes to building and promoting narrative: the difference between lucking into that match on short notice in the middle of a tournament and having weeks to promote that match at a specific time and date is a lot of money left on the table.

Later we’ll take a deeper look at how emotional investment is created and what, exactly, e-sports organizations are trying to sell us. If you have any questions or comments leave them below and I’ll address them in the last part of this series.

In the meantime, here’s ten minutes of Chael Sonnen bullshitting from 2011: