I'm sticking to my guns on this. Although the current leaders in fantasy sports will likely continue to own the core space, I believe there are significant opportunities for new innovators to be big winners on social networks.
Through all my conversations, there is one point everyone seemed to agree on: The fantasy sports demographic is ideal for marketers. The typical fantasy player is an 18-45-year-old male who spends money; these guys have credit cards and are not afraid to use them. Obtaining the highly desirable and engaged male audience in mass numbers is the end game for fantasy sports operators.
Leveraging an existing platform or social network to acquire new fantasy users is one thing, but monetizing those users is a totally different animal. Today, fantasy sports operators primarily monetize through ad sales / sponsorship, league fees and upgrades to premium content.
In order to take fantasy to the next level and see a serious increase in scale and revenue, the mindset of how fantasy monetizes must change and evolve. Anyone who has been responsible for the bottom line of an ad sales model knows how difficult it can be to rely solely on ad sales and sponsorship. You might have the traffic, but not necessarily success in selling your inventory. In addition, most of the leading operators are now giving away leagues, premium content and live stats for free (a serious money maker in the past), and monetization outside of ad sales in fantasy is starting to decrease.
Fantasy needs to adapt and take a page from the micro-transaction models that many online gaming companies are using. Looking solely at ad sales and sponsorships is a mistake. Fantasy sports operators should be capitalizing on their users' familiarity with the micro-transaction model and take advantage of it by implementing opportunities to spend throughout the games they play.
A great example of this is "Snap Draft," which was developed and is operated by Fanball. Snap Draft is a micro-transaction-based daily, weekly or monthly contest that lets users create and play instant fantasy games for dollar amounts typically ranging from $1 to $5. Players create their teams and match up against opponents, while Fanball takes a fee for facilitating the draft and running the contest.
NBC Sports and Comcast are others who have seen the value and syndicate a co-branded version across their sports sites to increase revenue. I think Fanball's concept is genius; the user interface could be improved, but the model is rock star. By providing daily games, including basketball and football, and opening it up to a broader market, they provide sports fans with more opportunity and less commitment of an entire season.
The monetization funnel is key for fantasy's future. Just getting users to show up at the front door is not good enough in today's world. As a marketer, you need to make sure you are maximizing revenue by leveraging qualified users who are willing to spend money by moving them through your monetization cycle.
Let me leave you with a question. If all the major players are moving to or already offer a free fantasy model, what are your ideas for monetizing the market? Can you get the masses or the casual fantasy player to spend hundreds of dollars each year playing fantasy sports?