Fantasy Sports is Our Undiscovered Game

Electronic Gaming Business, July 28, 2004

If video game companies are looking for reliable, robust revenue streams outside of console and PC titles, then they need to consider how to leverage the outrageously popular, ever-growing fantasy sports markets. Electronic Arts' recent opening of its fantasy sports product marks the first foray by a major electronic games company into this segment, and it makes a lot of sense for the industry. Running fantasy sports leagues requires mountains of player, team and stadium stats and news of precisely the sort most video game manufacturers already use to construct their sports titles.

With fantasy sports generating massive amounts of traffic from a key demographic, its audience represents an irresistible advertising and comarketing opportunity for game makers who want to evolve into games media companies.

The Fantasy Sports Trade Association reports that there are 15.2 million fantasy sports players out of some 90 million active sports consumers in the U.S. alone. That number represents 7.2% of all Americans, according to the FSTA. The number of fantasy sport players has quadrupled in the last 10 years alone. This audience is lucrative. Major League Baseball reports that fantasy baseball fans alone spent an average of $178 each last year on site fees, books and magazine relate dot the hobby, a 10% increase over the year before.

Not only is the growth curve phenomenal in terms of raw popularity, but fantasy sports has tremendous potential across platforms. Because breaking news is vital to fantasy players, mobile content extensions of the games are generally regarded as one of the most promising areas of entertainment data services for carriers. Mforma recently signed a deal with CBS Sportsline to provide fantasy data to customers. Yahoo Sports charges an additions $3.95 per season to give fantasy sports subscribers mobile access to their teams. Also relatively untapped are international extensions of U.S. brands as both Europe and Asia promise to become hotbeds of fantasy league activity.

The Golden Audience

The audience for fantasy league sports is not only the key demographic advertisers are now hunting, but it is also the demo at the core of video gaming. According to comScore Media Metrix, fantasy players are 75% male, and more than a third are between 23 and 34. They are also much more likely to have a $100,000 household income and have post-grad education. To be sure, game companies that have the resources and relevant sports titles should be looking to partner with existing fantasy leagues, but they should also be looking to promote their line of games into this segment.

Fantasy sports usage hits its height in October, because football, basketball and hockey are all in season at the time. With the end of football in January, the audience shrinks by about half. What is most important about fantasy sports traffic beyond demographics, however, is its massive stickiness. Users visit their fantasy sport sites on average seven times a month with each visit involving an unheard-of 93 minutes and 219 page views. This represents an astonishing marketing opportunity for game companies, because it is here that their hardcore demographic is locked in.

As part of a reported $1 billion/ four-year licensing deal with Players, Inc., Sports Business Journal says that EA Sports also licensed use of player identities in fantasy leagues so that Madden NFL gamers could use their fantasy league rosters to create teams across both fantasy and video game properties. An emerging dream of sports video game makers is having the ability to run their sports titles over connected consoles in a fantasy league-like tournament structure.

Whether sports companies, even EA, have enough marketing power in their retail releases to push enough of their sports title buyers into fantasy league play is a question. Yahoo has already demonstrated a stunning superiority in getting much more fantasy traffic than even the major sports information sites. The deal still waiting to be struck is between EA Sports and Yahoo whereby the two goliaths of online and offline electronic sports titles merge their traffic and technology to allow fantasy players to manage teams online and play the games via connected consoles.

This sort of cross-fertilization is why the Sega/ESPN football line remains very much in play, despite Madden's market dominance, and why the publishers are perhaps willing to sell the title at an obvious loss to build brand. The ESPN brand has a console title, an active online fantasy sports franchise and some of the best TV promotional exposure known to sports, while Yahoo and EA Sports have only one of those three components. If ESPN can turn on the switch first in linking the three elements effectively, it could be well positioned for the next stage of sports title warfare.

Game companies also should not be cowed by these major players, as there are many more niches and alternative fantasy league providers that reflected in comScore's numbers. FoxSports and The Sporting News recently partnered to run fantasy leagues. The official sports leagues themselves are among the largest fantasy sports sources as well. In terms of partnering with video game companies and leveraging sports fan addiction across platforms, this remains undiscovered country. A good place to start is the extensive membership list at the FSTA (http:// www.fsta. org/corporate.shtml) which is a catalog of suppliers and private label fantasy game providers.