Singaporean mixed martial arts promoter One Championship expects to reach profitability within a few years, its group chairman told Nikkei Asia, although he noted the company still prioritizes investments to consolidate its global position outside of Asia.
From eye-catching brief highlights on Facebook to live streams on streaming services like Amazon’s Prime Video, the combat sports brand’s fights have become ubiquitous across many tech platforms, gaining global reach through the largest number of viewers staying at home during the Covid-19 pandemic.
Even as one of the fastest growing digital sports companies – with as many as 14 billion views globally last year across social media platforms – One Championship is still focused on investing in overseas expansions in North America, particularly in the United States, where American promoter Ultimate Fighting Championship (UFC) has a stronghold.
“We are not there yet. [to break even]. It could take a few years. What is clear is that we are on the right track,” One Championship Group President Teh Hua Fung said in an interview.
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At a time of market uncertainty, as more and more investors pay greater attention to profitability, the One Championship challenge shows whether high-growth companies requiring heavy investment can prove their growth from the early stage. initial loss.
Teh said he was confident the group’s business model was “inherently profitable”, adding that “revenues will grow very quickly” once the company has strong brand recognition and the content to attract viewers to markets. strangers.
“It’s like a theme park or a work of art – when it’s not done, it’s not worth much,” Teh said, “but when it’s done, it’s worth a lot.”
“If you try to monetize too soon, you’re actually limiting your growth,” he added.
Founded in 2011 by Chairman and CEO Chatri Sityodtong, a martial arts instructor turned entrepreneur with a Thai father and Japanese mother, One Championship started out primarily as a live event promoter. Investors include Temasek Holdings from Singapore and Sequoia Capital from America.
Since the late 1990s, combat sports have seen a dramatic rise and fall. In Asia, Japan’s professional K-1 kickboxing peaked, followed by mixed martial arts brand Pride, which at one time was one of the UFC’s biggest contenders.
But One Championship saw potential in Southeast Asia, with its traditionally rich martial arts culture, including muay thai, silat melayu in Malaysia, the Philippines eskrima or Myanmar lethwei.
Along with mixed martial arts, the company featured muay Thai, submission grappling, and Burmese boxing, making it a bigger platform than the UFC in terms of the number of disciplines.
While former Asian promoters had to rely on TV broadcasts, One Championship took advantage of the rapid penetration of smartphones in the region.
“Before, it was all about TV networks and TV stations,” Teh said. “Digital gamers are becoming key players in the game.”
The company has expanded its media and digital revenue streams, such as media rights and sponsorships, which now account for more than half of its total revenue, according to Teh. In 2018, it became a unicorn, an unlisted company worth over $1 billion, distributing content in over 150 countries.
“It’s an IP business where you have to grow the IP to an appropriate scale before the revenue happens,” Teh said. “The challenge is to build the intellectual property and get it to a point where you have product and brand leadership and great distribution.”
The years of the Covid-19 pandemic have brought a mix of “good and bad”, Teh added. The lack of live events has affected ticket sales and accommodation costs, which are some of its main sources of income.
Still, Teh said, 2021 turned out to be a “record year” for revenue as the company was able to secure a wider audience and licensing rights.
According to a Nielsen report released in April, One Championship ranked second overall in digital viewership for global sports properties, just behind the National Basketball Association of North America.
The combat sports company has traveled across platforms and is now venturing overseas with more partnerships to gain an audience beyond its core Asian markets.
In April, it announced a five-year distribution deal with Amazon’s Prime Video to stream live events in the US and Canadian markets.
“The more people watch us, the more they will know about the brand and we will be able to acquire new fans in the largest sports market in the world, and we aim to organize live physical events in the United States next year,” said said Teh.
The overseas expansion follows its last $150 million funding round last December, led by Guggenheim Investments and the Qatar Investment Authority. The round reportedly gave the group a valuation of $1.35 billion.
However, the company’s ability to gain traction in the United States will be crucial in proving its growth ahead of its highly anticipated IPO. Parent company Group One Holdings is said to have chosen the United States for an IPO.
“A potential IPO is one of many options we are considering to raise long-term capital. We want the business to be ready because you never know when the markets will turn. immediately [plan]”Teh said.
“What we’re focused on now is being good stewards of the money we’ve raised.”
A version of this article was first published by Nikkei Asia on September 26, 2022. ©2022 Nikkei Inc. All rights reserved.