Commentary
Fantasy's Future Is Social
- by Scott Philp , September 15, 2009
There are an estimated 30 million people in North America playing fantasy sports and that market is predominately owned by three key players -- Yahoo, ESPN and CBS Sports. All of these companies have solid products and a large user base, making it difficult for new companies to break into the mainstream. Even with new innovative fantasy products and platforms, it has been nearly impossible for emerging operators to reach the masses. Several companies have spent millions of marketing dollars trying to drive users to their sites and just can't break in.
As you look at the leaders in this space, they share several characteristics. First, all three are consistently ranked at the top comScore's sports category each month. Secondly, they were early entrants and thirdly, they all have several, robust marketing channels across major media outlets to promote their offerings (it helps when ESPN and CBS are both broadcasters of exclusive NFL games). Throw into the mix how tough it is convince a league of 10 guys to jump ship from one of the leaders and give up years of history on their records, badges and accomplishments, and you can see the challenge.
But, there are changes on the horizon. Since the ubiquity of social networks, opportunities are now surfacing for new companies and developers to leverage social media tools to break into the fantasy sports market.
Facebook has nearly 30 million users playing social games monthly. That is currently the size of the entire fantasy sports market. The fantasy games that are starting to gain traction on social networks maintain the key features and functionality that players are accustomed too from the leading operator sites but are built to be faster, lighter, more social and extremely viral. New fantasy platforms are also starting to mirror monetization models similar to other successful social games on Facebook such as Zynga and Playdom. Facebook gamers are familiar with this virtual currency model which should correlate to a stronger conversion and retention rate for these new applications.
As one of the largest sports applications on Facebook, Watercooler is an exciting company to watch this year as it enters the market with a suite of fantasy football applications. With more than 40 million fans connected on Watercooler's properties, and the core of its users being sports enthusiast, it can effectively reach the masses and extend a fantasy sports experience that should resonate with its current fan base through a channel that didn't exist five or ten years ago.
Citizen Sports is another developer that has gained traction in this realm. The application was widely adopted on Facebook because it allowed players to easily compete against their friends, and offered customizable tools that provided all the key features such as live scoring and drafting. Outside of a pure social network, even a massive media operator like Fox Sports has partnered with Open Sports for this 2009 NFL season to create a more interactive and social platform to operate fantasy sports.
The future of fantasy sports is exciting; the market is growing year over year. New platforms and games are starting to evolve with new monetization models, and even channels like interactive TV and mobile will create significant growth opportunities for this burgeoning market. This will be an interesting year to watch. If I was a betting man, I would guess that many of the older, more traditional fantasy sites and games are going to learn a lot from some of these newer market entrants. What do you think?
Nice piece Scott. As an "extroverted, middle-aged guy" whose Mom doesn't have a basement, I remain excited about the changes in fantasy sports (I started doing leagues when you still manually entered stats using a copy of USA Today). I agree that traditional sites are starting to learn new tricks from social media, and it's a matter of time before some exciting monetization models take hold.
Scott
[Quick Hit is a client btw, but I don't work on the account. I am, however, addicted to fantasy and social media, and I'm glad we have them on board!]
Just like many things in the digital space, Fantasy sports has become big business. So much so, that it's one of
Yahoo's remaining subscription models that consumers I know still pay for. It's come a long way since I was playing it in the 90s and the future remains bright for a product that continues to monetize well. Nice work Scott!
Great points! It's going to be interesting to see the direction fantasy sports take within social media.
Scott brings great perspective to the issue. Fantasy is fast becoming big business for major media companies and new companies are becoming aggressive and innovative in their strategies. Scott is correct when he states that the older sites will be learning from the new entrants. A very informative article by Scott.
What about the money?????? I am ok if my league migrates from Yahoo to Facebook. It is free either way. In fact Yahoo has done a fabulous job upgrading the free leagues and they make no money from me. so why be in Fantasy Football? Doesn't make sense.
None of these sites make money off me via Ads anyway since i would gladly pay. I could never figure why they don't charge. But I refuse to allow Ads on my screen except for a few select websites. And I actually click on ads so those sites make money which is dumb because I am not buying anything just clicking as a thank you for free content. Talk about a weird industry we are in.
Responding to Peter I am in a free Yahoo league. Not sure why they don't charge me it is really slick. I used to pay many years ago. But now it's free?
I think this is an insightful point about the upcoming paradigm change in fantasy sports. Social networks are truly disruptive to the current online environment.
Although I don't play fantasy sports, I am a user of social networks and can see how these types of applications will explode across the networks. Really interesting piece!
Speaking of new fantasy sites...how about a whole new fantasy niche, "daily" fantasy sports! Why wait an entire season to get paid? Contests at http://365fantasysports.com only last a day (or a NASCAR or football weekend). Play for real money, legally with a huge variety of contests from which to choose. First game is free upon registration. Won't be long before all 30 million are familiar with the term, "daily fantasy sports" and sites like 365fantasysports.com.
Scott, Good write up. You'd like to hope that the Fanasty Sports market can remain competitive, but I feel even with the power and relatively low-cost reach of social media, that small-time operators will still face a daunting climb. This challenge increases ten-fold if the big three remain progressive enough to understand where the market is going and proactively continue to seek out new technologies to stay ahead of the game. As a small business supporter however, I am constantly rooting for the small guys! Let's go fellas!
Good stuff here Scott. It's interesting though looking back at when fantasy sports migrated online in the late 90s. It really was the beginning of the online social network, however micro the individual communities of 12 guys might have been. (I was in a league hosted on Geocities in '98) You don't see that historic link talked about considering those online leagues pre-dated the massive social networks by several years. Ironic that it comes full circle and we're now predicting that fantasy in all its forms could be the monetization solution many of the social networks are looking for. Looking forward to seeing more on this topic now that I think we can officially call the fantasy industry "mainstream".
Another good article by Scott