FanDuel announced it was closing the fantasy esports platform AlphaDraft this week, and it more or less put a cap on a vertical that was taking off like wildfire less than two years ago.
In some ways, it is a microcosm of how bullish everyone was on the daily fantasy sports industry in 2015, and how projections and expectations got reined in in the past year.
The sky was the limit for fantasy esports
It’s amazing to think, in retrospect, that the fantasy esports industry was attracting tens of millions of dollars in venture capital a little over a year ago.
At one point in the spring of 2015, start-ups AlphaDraft and Vulcun had attracted $17 million in funding in the space of a month. Of course, that’s part of what VC does — identify high-ceiling but potentially risky companies in which to invest.
The early returns for the fantasy esports segment were encouraging, showing what appeared to be an easy way to capitalize on the engagement of esports fans. Both sites promised millions of dollars in contests featuring guaranteed prize pools.
The big two in DFS quickly sought to capitalize. DraftKings created its own fantasy esports product; FanDuel bought AlphaDraft in September of last year. Both companies likely saw a high ceiling for DFES, as well.
Wither DFES
Of course, we never ended up finding out what the ceiling could be. Soon after the flurry of money and attention was thrown at the vertical, the DraftKings data leak and ensuing legal issues that arose in a variety of states rewrote the future of the larger DFS industry. That had a cascading effect for fantasy esports.
- AlphaDraft is now going away, and had never been fully leveraged by FanDuel, which had already cut staff at one point for the standalone platform under its umbrella.
- Fantasy esports is an afterthought at DraftKings compared to its other offerings. The biggest contest for the world championships for League of Legends is a prize pool of $2,500.
- Vulcun stopped offering paid-entry contests because of legal concerns. Later it pivoted entirely to a new concept related to esports and no longer exists.
Will DFES ever come back?
In the end, the time, money and interest hold and/or grow to the DFES market disappeared. It’s even possible DFES was just a short-lived fad that was not going to gain traction, even if a favorable environment for DFS as a whole existed.
All of the above doesn’t necessarily mean we won’t see the DFES format ever again, or it can’t possibly flourish in the future; the over-arching esports industry still hasn’t fully matured, after all. And fantasy sports obviously remain a popular activity for more traditional sports.
Could we see a new iteration or a reboot of DFES in the future as daily fantasy sports gains legal clarity? It’s at least possible. But for now, the DFES industry is basically on hiatus, if its obituary hasn’t already been written.
