Finance Tech Uncategorized

ESPN considering daily fantasy sports expansion

The network's interest indicates the growth of that subset of the fantasy sports market.

(AP Photo/Mark Lennihan)
(AP Photo/Mark Lennihan)

ESPN is considering expanding its fantasy sports offerings to include single-day competitions, another indication of growth of that subset of the market.

ESPN, whose current daily-game offerings are mostly limited to the semi-popular “Streak for the Cash,” would be following the leads of NBC Sports Ventures, Comcast Ventures and Fox Sports, each of which have investments or partnerships with daily fantasy sports (DFS) platforms.

ESPN would be several years behind the fastest growing trend in fantasy sports, as the two primary fantasy sports sites – FanDuel and DraftKings – have head starts of several years of name recognition. The two sites also accumulated $41 million and $70 million, respectively, in recent capital raises.

(Source: Enthusiast Print)
(Enthusiast Print)

ESPN can definitely afford to invest in its own DFS platform while leveraging its pre-existing infrastructure and user base. As David Geller, founder of DailyMVP’s parent company explained:

“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.”

ESPN’s entry into the daily fantasy arena may be aided by the absence of a zero-sum factor in the market. Season-long leagues take long-term dedication and commitments of time, limiting the number of leagues and sites users have the bandwidth to join. Daily competitions, on the other hand, are quick, allowing fans to stay involved in multiple competitions across numerous platforms.

DFS sites have expanded their marketing strategies, as demonstrated by DraftKings' title sponsorship of the Breders' Cup Filly & Mare Sprint. (Harry How-Getty Images)
DFS platforms have expanded into sponsorship, with DraftKings becoming the title sponsor for the Breeders’ Cup Filly & Mare Sprint. (Harry How-Getty Images)

So though FanDuel has captured 65 percent to 70 percent of the market, DraftKings has seen exponential growth as well, with its number of users increasing 12 times from last year. Fantasy sports users aren’t necessary loyal to particular sites. The Fantasy Sports Trade Association asserts that nearly 75 percent of the 41.5 million fantasy sports users use four to six sports websites. Translation: There’s plenty of room for new entrants.

Rather than establishing a competing daily fantasy sports platform, ESPN may look to purchase a pre-established site and simply throw the weight of its brand behind that investment. FantasyUp, a site created by a former FanDuel winner, was created for just that purpose, with founder Dan Ziernicki promising to turn his start-up into a “cash cow . . . that is ready to go” should ESPN make an offer.

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