Will ESPN Enter Daily Fantasy Sports Space?
Posted: Wed Jan 07, 2015 11:38 am
Sports Business Journal hinted yesterday that ESPN will enter the Daily Fantasy Sports space by football of 2015. It's an interesting idea for the Worldwide Leader of Sports as they would immediately become (if they aren't already) the Worldwide Leader of Fantasy Sports with this move. But depending on which way they go -- do they buy an existing industry leader or build a new game? -- it could affect the millions of dollars they receive in ad revenue. Interesting.
Obviously this would open up DFS to an even bigger potential audience of sports fans who could play fantasy sports for the first time, so I see it as positive for the industry. But what will it do to the DFS market? We'll have to wait and see.
Anyway, enjoy these two articles on the subject. Lots of information there:
http://www.sportsbusinessdaily.com/Jour ... ports&sc=0
Here's the actual story:
ESPN eyes getting into daily games
Executives weigh entering daily fantasy business
By Terry Lefton & John Ourand, Staff Writers
Published January 5, 2015
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You can’t watch or listen to ESPN without being bombarded by ads for daily fantasy sites like DraftKings and FanDuel. Now, the all-sports media company is looking hard at leveraging the power of its own brand in the lucrative daily fantasy business that offers hundreds of millions of dollars in cash prizes.
Nothing is imminent, but a group under John Kosner, ESPN’s executive vice president of digital and print media, is looking into how the company can get involved in the increasingly profitable daily fantasy business as soon as next football season.
ESPN has dabbled with daily games, starting in 2000 when it launched “3 Play,” to today’s “Streak for the Cash.” ESPN also has weekly games, like “Triple Option” and “Gridiron Challenge.”
The difference is that those games generally do not offer daily cash prizes and don’t involve picking traditional fantasy lineups. The biggest daily fantasy games offer cash prizes and more closely resemble gambling.
ESPN’s push comes as market leaders DraftKings and FanDuel have been spending millions from their recent venture funding to buy sports media and sponsorships, looking to build brand awareness in the growing market for daily fantasy games.
There are already media companies with skin in the game, as NBC Sports Ventures and Comcast Ventures each have equity in FanDuel.
Meanwhile, Fox Sports signed an advertising deal with DraftKings about five months ago, coinciding with the start of the NFL season. DraftKings is the exclusive sponsor for Fox Sports Digital’s daily fantasy and sponsors content like the “Jay and Dan” podcast.
Seasonlong fantasy games have long been dominated by media brands like Yahoo, CBS and ESPN. Now those same companies must decide whether it is smart business to launch their own daily fantasy brands, do a joint venture, or outright acquire the largest daily fantasy players while they are relatively affordable.
ESPN sources predict something will be up and running — either an ESPN-branded offering or a venture with an existing company — by next football season.
“For any sports media company, the decision now is whether to buy, build or just keep taking the advertising dollars from daily fantasy sites,” said Chris Russo, the former senior vice president of new media at the NFL, who subsequently headed Fantasy Sports Ventures, a roll-up of fantasy sports sites.
Daily fantasy has been one of the fastest-growing parts of the sports business, with the top two sites raising $111 million in venture capital over the past five months. Last September, FanDuel picked up $70 million in funding from Shamrock Capital Advisors, NBC Sports Ventures and KKR & Co. A month earlier, DraftKings received $41 million from The Raine Group, Redpoint Ventures, GGV Capital and Atlas Ventures.
FanDuel and DraftKings are the two biggest sites. But many smaller ones, like DraftDay and FanThrowdown, pop up seemingly every day.
“It’s crazy not to have a piece of daily fantasy right now. There’s just so much money chasing it, it’s out of control,” said Mark Mariani, the former president of sales and marketing of Internet sports pioneer CBS SportsLine, who is now president and partner of VegasInsider.com, which includes daily fantasy games alongside its sports handicapping offerings. “Everyone’s in a land grab, figuring the more customers and scale they build as the business matures, the better off they’ll be. That’s why you are seeing the incredible valuations and the large-scale marketing campaigns.”
Daily fantasy sites have become a popular way to “bet” on games. It mirrors the traditional fantasy business by allowing people to draft players and monitor their stats but moves at a quicker pace. The increasing popularity also can be seen in the prize money that’s been doled out. FanDuel says it paid out $10 million in prizes in 2011. In 2014, it paid out more than $400 million.
Russo predicted that daily fantasy revenue will eclipse the rest of the fantasy industry this year. He said that only about 5 percent of all fantasy players are involved in daily fantasy games, indicating the potential for a vastly larger market.
“If ESPN does its own [daily] fantasy by itself, that will certainly cause other media companies to think hard about acquiring one of the other players,” said Russo, who now heads consultancy CR Media Ventures. “A large portion of its business is disseminating sports information, which ESPN obviously does sell. What they don’t do is collect a lot of money every day and pay it out. There’s expertise and technology there most media companies don’t have.”
Sports media and properties have embraced daily fantasy as a windfall, with leagues and teams cutting deals with the sector’s top players. Other than penciling out the potential return on investment, there are a host of larger issues ESPN would have to deal with before launching its own cash daily fantasy game. There is some question about how ESPN parent Disney would feel about getting into daily fantasy, which some describe as a step away from gambling.
Another potential sticking point could be the effect of an ESPN daily fantasy game on ad dollars from the likes of FanDuel and DraftKings, which would then be competitors. Sources say ad dollars from daily fantasy sites this season were one of the biggest growth categories across all networks. Would those sites be less likely to advertise on ESPN? Or would ESPN prohibit competitive ads on its own media? Those are some of the issues ESPN’s top executives are considering.
Still, the cost of entry is relatively low and many industry observers expect the biggest media companies to make bigger inroads with daily fantasy this year.
“The barriers to entry in short-term fantasy now are marketing dollars and the ability to reach an audience, so if it’s a media company, those things are built in,” said David Geller, founder of DailyMVP parent company TopLine Game Labs, and the former global head of fantasy sports at Yahoo.
And an analysis piece:
http://www.bizjournals.com/newyork/blog ... l?page=all
What's your thoughts on this?
Obviously this would open up DFS to an even bigger potential audience of sports fans who could play fantasy sports for the first time, so I see it as positive for the industry. But what will it do to the DFS market? We'll have to wait and see.
Anyway, enjoy these two articles on the subject. Lots of information there:
http://www.sportsbusinessdaily.com/Jour ... ports&sc=0
Here's the actual story:
ESPN eyes getting into daily games
Executives weigh entering daily fantasy business
By Terry Lefton & John Ourand, Staff Writers
Published January 5, 2015
Font Size Resize Small Resize Normal Resize Large | Print | Share |
You can’t watch or listen to ESPN without being bombarded by ads for daily fantasy sites like DraftKings and FanDuel. Now, the all-sports media company is looking hard at leveraging the power of its own brand in the lucrative daily fantasy business that offers hundreds of millions of dollars in cash prizes.
Nothing is imminent, but a group under John Kosner, ESPN’s executive vice president of digital and print media, is looking into how the company can get involved in the increasingly profitable daily fantasy business as soon as next football season.
ESPN has dabbled with daily games, starting in 2000 when it launched “3 Play,” to today’s “Streak for the Cash.” ESPN also has weekly games, like “Triple Option” and “Gridiron Challenge.”
The difference is that those games generally do not offer daily cash prizes and don’t involve picking traditional fantasy lineups. The biggest daily fantasy games offer cash prizes and more closely resemble gambling.
ESPN’s push comes as market leaders DraftKings and FanDuel have been spending millions from their recent venture funding to buy sports media and sponsorships, looking to build brand awareness in the growing market for daily fantasy games.
There are already media companies with skin in the game, as NBC Sports Ventures and Comcast Ventures each have equity in FanDuel.
Meanwhile, Fox Sports signed an advertising deal with DraftKings about five months ago, coinciding with the start of the NFL season. DraftKings is the exclusive sponsor for Fox Sports Digital’s daily fantasy and sponsors content like the “Jay and Dan” podcast.
Seasonlong fantasy games have long been dominated by media brands like Yahoo, CBS and ESPN. Now those same companies must decide whether it is smart business to launch their own daily fantasy brands, do a joint venture, or outright acquire the largest daily fantasy players while they are relatively affordable.
ESPN sources predict something will be up and running — either an ESPN-branded offering or a venture with an existing company — by next football season.
“For any sports media company, the decision now is whether to buy, build or just keep taking the advertising dollars from daily fantasy sites,” said Chris Russo, the former senior vice president of new media at the NFL, who subsequently headed Fantasy Sports Ventures, a roll-up of fantasy sports sites.
Daily fantasy has been one of the fastest-growing parts of the sports business, with the top two sites raising $111 million in venture capital over the past five months. Last September, FanDuel picked up $70 million in funding from Shamrock Capital Advisors, NBC Sports Ventures and KKR & Co. A month earlier, DraftKings received $41 million from The Raine Group, Redpoint Ventures, GGV Capital and Atlas Ventures.
FanDuel and DraftKings are the two biggest sites. But many smaller ones, like DraftDay and FanThrowdown, pop up seemingly every day.
“It’s crazy not to have a piece of daily fantasy right now. There’s just so much money chasing it, it’s out of control,” said Mark Mariani, the former president of sales and marketing of Internet sports pioneer CBS SportsLine, who is now president and partner of VegasInsider.com, which includes daily fantasy games alongside its sports handicapping offerings. “Everyone’s in a land grab, figuring the more customers and scale they build as the business matures, the better off they’ll be. That’s why you are seeing the incredible valuations and the large-scale marketing campaigns.”
Daily fantasy sites have become a popular way to “bet” on games. It mirrors the traditional fantasy business by allowing people to draft players and monitor their stats but moves at a quicker pace. The increasing popularity also can be seen in the prize money that’s been doled out. FanDuel says it paid out $10 million in prizes in 2011. In 2014, it paid out more than $400 million.
Russo predicted that daily fantasy revenue will eclipse the rest of the fantasy industry this year. He said that only about 5 percent of all fantasy players are involved in daily fantasy games, indicating the potential for a vastly larger market.
“If ESPN does its own [daily] fantasy by itself, that will certainly cause other media companies to think hard about acquiring one of the other players,” said Russo, who now heads consultancy CR Media Ventures. “A large portion of its business is disseminating sports information, which ESPN obviously does sell. What they don’t do is collect a lot of money every day and pay it out. There’s expertise and technology there most media companies don’t have.”
Sports media and properties have embraced daily fantasy as a windfall, with leagues and teams cutting deals with the sector’s top players. Other than penciling out the potential return on investment, there are a host of larger issues ESPN would have to deal with before launching its own cash daily fantasy game. There is some question about how ESPN parent Disney would feel about getting into daily fantasy, which some describe as a step away from gambling.
Another potential sticking point could be the effect of an ESPN daily fantasy game on ad dollars from the likes of FanDuel and DraftKings, which would then be competitors. Sources say ad dollars from daily fantasy sites this season were one of the biggest growth categories across all networks. Would those sites be less likely to advertise on ESPN? Or would ESPN prohibit competitive ads on its own media? Those are some of the issues ESPN’s top executives are considering.
Still, the cost of entry is relatively low and many industry observers expect the biggest media companies to make bigger inroads with daily fantasy this year.
“The barriers to entry in short-term fantasy now are marketing dollars and the ability to reach an audience, so if it’s a media company, those things are built in,” said David Geller, founder of DailyMVP parent company TopLine Game Labs, and the former global head of fantasy sports at Yahoo.
And an analysis piece:
http://www.bizjournals.com/newyork/blog ... l?page=all
What's your thoughts on this?