I, cautiously, think the UFC's purchase of Strikeforce is, overall, a good thing for MMA, at least in the medium- and long-term.
1. The UFC product on display improves: The level of athletic skill in MMA is not as high as it is in other sports. Assuming the UFC gets all or almost all of the best fighters from Strikeforce once the SF fighters' contracts run out, then that means the level of athleticism for the average UFC fighter increases. The worse fighters get cut, so the product the UFC regularly puts out increases. That's good, not only for the hard-cores, but also for the casuals and not-there-yets -- the higher the level of athletic talent on display, the more interesting MMA will look in comparison to other sports.
2. I admit, this is not better for the fighters, at least in the short-term: What about the fighters? Well, things suck for them: there are now many more fighters for just about the same number of spots, which means that a lot of people will get cut. With only Bellator and regional events to turn to, this means that many fighters are going to have to take pay-cuts. Moreover, with the UFC now the only game in town, it's gotten even more impossible to have a fighter's union.
3. True, there's less MMA to watch, but I predict this will be only for the short-term: In the short term -- after SF gets pulled into UFC, anyway -- things are bad for consumers: there will be less MMA to watch. That said, one question we have to ask is: how big is the market for MMA? It was, apparently, big enough for all of SF, UFC, and Bellator to co-exist. The fact that SF is getting absorbed into UFC doesn't change that, unless you think that if less MMA is provided, then the demand for it will go down correspondingly. If the MMA market remains as big as it was before but without another big provider of MMA fights, then the market will be underserved. If the market is underserved, then there is strong incentive for another promoter to take that share of the market that isn't getting served.
Now, I know that large start-up costs often prevent new promotions from arising. However, this just raises two questions: (1) How large, really, are the start-up costs for an MMA promotion? We've seen several arise over the past few years -- Affliction, Elite XC, Strikeforce as a national promotion -- and one of them, Strikeforce, didn't fail. (Another, Elite XC, managed to make waves with a low-talent internet phenomenon headlining.) This suggests that the start-up costs aren't prohibitive. (2) There are wealthy capitalists like Mark Cuban and Donald Trump, who have said they want to get into MMA. They could easily pay off the start-up costs even if they are prohibitive. Moreover, Elite XC, Strikeforce, and Bellator have both provided examples to wanna-be promotions how to make your mark: find an exciting fighter or fighters; feed them softies; have tournaments; sacrifice some independence for network deals; and (and here's something the Japanese in particular know how to do well) do nice promotional packages. These last three things are things that the UFC doesn't do, or doesn't (generally) do well.