Two massive companies are getting into the daily fantasy sports space — Yahoo and PokerStars parent company Amaya Gaming — and they have some advantages that current DFS operators do not.
The disadvantage for both sites are obvious: They are late to the party, as two sites have obviously established market dominance in the current climate.
We take a closer look at what the two companies bring to the table, in terms of the possibility of competing at the upper echelon of the DFS industry. It’s certainly not a given that either will cut significantly into the marketshare of the “big two” of DraftKings and FanDuel.
The internet giant is uniquely situated to compete in the DFS market, although opinions in the industry vary wildly on how it will do in both the short term and the long term. Eilers Research predicts just $5 million in revenue for 2015.
Yahoo’s main advantages in the DFS market, at least over the current entries in the market, are in customer acquisition — both in access to customers and the cost of reaching them.
Yahoo isn’t just a DFS site
Most DFS sites are just that: They offer daily fantasy sports.
Yahoo is currently ranked fifth globally by Alexa among all websites in terms of popularity, with an estimated 300 million unique users each month. For just sports content, when Yahoo is considered in tandem with partner NBC Sports, 58 million uniques were generated in May.
By way of comparison, DraftKings and FanDuel are both ranked between 1,500 and 2,000, just in the U.S.
The NBC relationship likely can’t be counted on to drive DFS traffic, as NBC Sports is an investor in FanDuel, and was a part of that DFS site’s recent $275mm raise. Even without being propped up by NBC, Yahoo Sports is one of the biggest sports portals around.
Yahoo can simply use its sports portal to “advertise” DFS to people who visit, which comes with it no cost at all. DraftKings, FanDuel and any other DFS site must pay a lot of money for that type of exposure (DK is paying hundreds of millions for an exclusive relationship with ESPN.)
Yahoo can also deploy its own advertising vehicle to promote DFS — although that has the possibility of taking away ad revenue from other sources. It seems more likely Yahoo will more often leverage “free” news and other positions for this purpose.
Yahoo has access to season-long fantasy players
One of the main goals of the DFS industry often boils down to how to convert season-long players to DFS.
While we’re unsure of exactly how many fantasy players use Yahoo’s platform, a fair estimate seems to be about 10 million, per Eilers.
Again, it’s easy for Yahoo to get its DFS product in front of eyeballs, at no cost. Daily fantasy has been incorporated directly into both the iOS app and the web platform, with Android functionality presumed to be around the corner.
How effective Yahoo can be at converting those players to DFS is an open-ended question. After all, its fantasy players have already been served up lots of DFS ads over the past few years from DraftKings and FanDuel.
Some question whether Yahoo would be able to get players that did not already try out DFS. At the same time, even if Yahoo just gets some of the millions of players already in the DFS universe, that’s not a bad starting point.
It stands to reason that acquiring DFS players for Yahoo, from its own platform, is easier than the threshold that FanDuel and DraftKings had to overcome as an ad/external link. Yahoo fantasy players already have accounts. The only barrier left is getting them to deposit, and to play their DFS contests.
Presumably, Yahoo can also use its data on its fantasy players in relation to the DFS product. Yahoo will know when a user’s season-long team is doing badly, and could serve those players ads or a custom promotion to attract them to their daily game. And that’s just one of the ways that data could be leveraged in an advantageous manner.
Yahoo will stream an NFL game this year
On Oct. 25, Yahoo will stream the game between the Buffalo Bills and the Jacksonville Jaguars that is taking place in London.
Granted, that’s not exactly a marquee matchup. But NFL games get eyeballs, no matter who is playing, especially when it’s the only game on (it takes place at 9:30 a.m., Eastern time).
It also has the cachet of being the first NFL game live streamed on the internet, so we assume that lots of casual viewers and fans will check it out, just out of curiousity. And that gives Yahoo an easy platform to once again advertise its DFS product.
While it’s not known exactly how much Yahoo paid for the rights to the game, it was certainly more than eight figures. One of the ways to get the most out of the deal will be to use the game as a way to promote DFS.
PokerStars parent company Amaya announced its intentions to get into the DFS market this spring, with a launch planned either in time for NFL season or by the end of the year. The online gaming giant recently sent out a survey to its former poker players in the United States.
Like Yahoo, opinions run the gamut on how successful PokerStars might be — from the possibility it will be a giant failure to it can compete quickly in the industry.
PokerStars has a lot of resources
Obviously, Amaya isn’t on the same scale as Yahoo. But its core business is online gambling, and it’s a company worth billions. In a reverse takeover last year, Amaya acquired PokerStars for nearly $5 billion; in daily fantasy terms, that’s far more than all of the non-Yahoo DFS companies combined.
PokerStars has its own software client, while everyone else in the DFS space is web and app based, showing the technical knowhow and manpower behind its operation.
PokerStars has brand recognition
It has been more than four years since PokerStars has operated in the United States — the American government shut down a number of online poker sites back in 2011.
But anyone who played online poker then would still easily recognize the PokerStars brand and would likely trust it. According to a recent survey of DFS players, more than 40 percent of current DFS players used to play or do play online poker.
The point is this: PokerStars would not be starting from scratch in promoting its DFS product in the U.S. A lot of DFS players will know the brand, and have deposited with them previously. How much value that name recognition is worth remains to be seen.
Amaya also has gaming licenses and millions of users all over the world, giving it an entry point for fantasy globally that no current operator can boast.
DFS is a natural fit for PokerStars
Not everyone agrees on the crossover between online poker and DFS. Whether or not you agree with the idea that DFS is gambling, there are a lot of similarities between running an online poker site and running a DFS site:
- Poker is driven by liquidity.
- Poker is a skill-based game, and the player ecosystem takes constant supervision.
- PokerStars is used to setting guarantees for its tournaments, and is well-suited to manage guaranteed prize pools in a DFS environment.
PokerStars can also afford to eat huge overlays, if necessary, right out of the gate, something most DFS sites do not have the luxury of doing.
PokerStars can manufacture interest and liquidity
PokerStars has a number of ways to drive customers to a DFS product, at least outside of the U.S.
- The site runs a variety of guaranteed prize pool tournaments and promotions every week. PokerStars could offer free tickets to a DFS contest as part of entering a poker tournament or by depositing.
- PokerStars has been rolling out sports betting in some jurisdictions, and can use that platform and data to create interest in its DFS product.
- If PokerStars wants to push heavily into daily fantasy soccer, two of the sport’s biggest stars in the world are under sponsorship deals with PokerStars — Crisitiano Ronaldo and Neymar Jr.
Who comes out ahead?
Whether Yahoo or PokerStars — or either — is best situated to challenge the DFS duopoly of FanDuel and DraftKings is an open-ended question. What is clear is both bring something to the table that most new DFS sites do not.