Yahoo and PokerStars look poised to enter the Daily Fantasy Sports market but will they unseat either of the two biggest players?
There has been a ton of big news in the daily fantasy sports world over the past couple of months. Industry leader DraftKings recently completed a $250 million deal with Disney that saw their company valued at a cool 900 million dollars. But more compelling has been the news emanating from company’s not even offering daily fantasy sports at the moment. Over the past month and a half, it was announced in separate earning calls that both Yahoo and Amaya Gaming (PokerStars) seem set on joining the daily fantasy market, and that both seem set to do before the start of the 2015 NFL season.
At this point no real details exist on what products either site will offer or how they will differ from what is now being offered by either of the two biggest sites (FanDuel and DraftKings). It was noted by Eric Fisher of the Sports Business Journal that Yahoo has plans to take a “unique” approach to daily fantasy sports. Meanwhile, Amaya has not laid out any real details except that it seems ready to unveil daily fantasy through its existing PokerStars brand and client. Still it is incredibly exciting to see two giants announce plans to enter the daily fantasy sports market as we have long been speculated that a Third (and possibly Fourth) Site would emerge.
In an effort to lay out what either of these two giants entering into the daily fantasy space would mean I’m going to give my thoughts on what players might expect to see from either of these new offerings and how it might affect the current landscape.
(note: most of the following is speculation and purely the opinion of the author)
If Amaya plans to enter the space through PokerStars then it will clearly have an advantage over Yahoo in one large regard: it already has a large clientele of people who are comfortable depositing money online to use in games with similar characteristics to daily fantasy sports. Since daily fantasy sports is viewed by many as a game of skill—similar to how poker is—the overlap and appeal to its existing client base will be obvious. Even though PokerStars had an unceremonious exit from the USA market in April 2011 it recently “allied” with Caesars in the fight to legitimize online poker and now seems poised to re-enter the American market in late 2015 in various states.
PokerStars will also have another large advantage over Yahoo in that they already know and love to host live events. While current DFS giants FanDuel and DraftKings have been known for their stunning and exciting live finals, it would not shock me in the slightest if PokerStars was able to match them in terms of their ability to host these events and provide players with the same kind of “live final” experience DraftKings and FanDuel have become synonymous with. PokerStars has hosted large-live poker series and events around the world for the past decade with huge success and I doubt the idea of transferring some of this knowledge and skillset into a daily fantasy sports offering has gone undiscussed.
Further, PokerStars knows and understands the meaning of large scale online tournaments and how they appeal to the elite and casual players alike. They already host multiple million dollar guarantee poker tournaments online and have been known for their enormous guarantees and series. While it’s no guarantee Amaya chooses to start their daily fantasy offerings at anywhere near the same size as their current poker tournaments if Amaya is serious about challenging either of the big sites this NFL season it may do so in an attempt to gain a significant market share as quickly as possible.
If and when PokerStars and Yahoo begin to offer DFS products, I would expect that PokerStars would be the one to compete more directly with DraftKings and FanDuel. With a very well-known and trusted brand and an already established ability to deliver quality gaming products and live events, I see PokerStars as having the potential to match the success of the two largest DFS sites in many regards and see a head-on battle between these “big three” as a likely scenario.
While Yahoo may not have the same sort of clientele as PokerStars it will not lack in player base, ad space or capital. Yahoo boasts a huge amount of season long fantasy players from their already established football, hockey, baseball, golf and basketball leagues, many of whom account for the estimated over 40 million fantasy participants in North America (as reported by Seeking Alpha here). As one of the largest search engines and news sites on the planet, Yahoo will also have all of the tools it needs to promote its product when ready.
Yahoo has already declared that it plans to take a unique approach to daily fantasy and my own opinion is that this will mean attempting to build on their huge season long player base. While Yahoo will likely turn out to be a major player eventually I see them initially trying to differentiate themselves from DraftKings and FanDuel by focusing on more convenient and easily digestible games for their more recreational client base. Yahoo’s largest obstacle will likely be converting many of their season long players into daily fantasy players. Doing so will be made easier by offering a product that is simple to use and unintimidating for the average person who is just getting started in daily fantasy.
This of course doesn’t mean Yahoo won’t start off by offering massive prizepools. It’s quite possible that they simply decide to throw caution to the wind and take on both FanDuel and DraftKings by offering large scale prizes and some serous player incentives; they certainly have the capital to do so. However I would suggest it is more likely Yahoo focuses on client retention and conversion while also using their ad space to create more buzz about their “unique” product. You may end up seeing some large online gpps on Yahoo, but it’s more likely that live finals and qualifiers don’t become a part of their offerings (at least initially). Yahoo will likely try to focus on differentiating and growing their product in the market and ensure their daily fantasy experience is different from what is already being offered.
Yahoo and PokerStars are two extremely different entities from a business standpoint so it should not be shocking that we may end up seeing two extremely different approaches to daily fantasy when they enter the marketplace. As a player it seems certain that prizepools, which are already approaching absurd weekly levels, will actually continue to rise. More importantly however is the fact that added competition may mean that already established sites become more focused on player incentives and rake reduction techniques to help retain existing players. And this in my opinion would be the biggest potential benefit to players.