New fantasy sports formats needed to woo Asia fans

Real-money daily fantasy sports (DFS) have the potential be successful throughout Asia. However, the predominant U.S.-focused form of the game is unlikely to gain traction in the region and other formats will be needed to appeal to an Asian audience.
Fantasy sports have been a fixture in North America since 1979, when a group of sportswriters devised a way to demonstrate their superior knowledge of baseball. What began as a game to gain bragging rights amongst friends found its Big Bang potential as fans realized this could be a replacement activity to traditional sports betting, which has been banned by federal law in all but four of the 50 states since 1992.

Flash forward to 2006, when the Unlawful Internet Gambling Enforcement Act (UIGEA) created a specific exemption that permitted and defined legal, real-money fantasy sports games. This exemption, originally lobbied for by the top North American professional sports leagues (NFL, NBA, MLB and NHL) as a pathway to generating licensing fees for the player data that powered fantasy sports games sat largely fallow for years. It was not until sites began offering carbon-copies of the traditional season-long fantasy game in a format that enabled weekly and daily play that this exemption found true life.

But while a handful of companies are seeing meteoric growth, offering DFS variants for American football, basketball and baseball, they have yet to demonstrate profitability (due to massive ad spends and customer acquisition costs), and seem poor fits for export to international markets.

DraftKings, one of the biggest U.S. operators, reported $30 million in revenue for 2014, up from just $4 million the previous year. While rival FanDuel cleared $57.3 million in revenue, up from $14.3 million in 2013.

First and foremost, the games are based largely on sports with slight fan interest outside of North America. The NFL and MLB are the most popular sports leagues in the U.S., but garner niche interest in Asia and Europe. Second, the format itself has virtually no analog in international sport. The “salary cap” structure, where fantasy players are given a uniform fixed budget they use to “buy” players for a fantasy team (as a team manager would) has no place in global games. It is a uniquely North American experience, primarily used to keep rich professional owners from spending uncontrollably and trying to “buy” championships, while buying championships is precisely the model that the dominant global soccer clubs pursue.

Lastly, the conventional DFS model is time-consuming for those who play. Even picking a single fantasy roster can take significant time — more than an hour, on average — due to salary cap management and player availability. Market studies have shown that the Number One reason people either don’t play or stop playing fantasy sports is that it takes too long and is too complicated.

It would seem that the prospects for DFS would be limited globally, but that would be very provincial thinking. That is because the focus of fantasy sports is in tune with sports marketing trends globally, which is largely based on creating perceived direct connections between fans and sports stars.

Team brands — while obviously still powerful — are challenged by personalities. Who is better known: Barcelona & Real Madrid, or Lionel Messi & Cristiano Ronaldo? If you are measuring by TV coverage and highlights, endorsement deals, and soccer jerseys on the backs of fans from Europe to Asia, the answer is clear: superior athletes get more visibility than their teams.

This is the potential global hook for fantasy sports. With near-universal access to television, combined with the Internet, mobile and social media, the personal connection global sports fans can have with their favorite athletes has never been easier to make. Fantasy sports potential for taking those personal connections to star players and offering real-money games that enable the public to focus on the players they love, free from the confines of the players’ teams, has powerful potential.

Messi versus Ronaldo only occurs on the field six or so times in a year. However, via fantasy sports, Messi versus Ronaldo can occur every week. But to unlock this potential, new formats for fantasy must take root (full disclosure: my company, FastFantasy, will be launching new formats this Fall).

Any game that can ride the wave of fan interest in star players has more upside than one that seeks to turn you into a sports accountant. Asia’s interest in those players is enormous.

The English Premier League for example, which has a worldwide TV audience of 4.7 billion, is particularly popular in Asia.

Serving those interests with games that are intended to be skill-based games that will conform to local laws, offering a legal alternative to sports betting, is an opportunity worth pursuing.

* Joe is the co-founder of Fast Fantasy, an innovative startup in the fantasy sports industry. He was also Director of the Interactive Media Entertainment & Gaming Association (iMEGA), Director of Strategy for America Online, Inc. (AOL) and Senior Editor/Manager of Internet Promotions and e-Commerce at Nextel (now part of Sprint). He has developed online strategies and campaigns for Sirius, Time, CNN, Warner Brothers and People Magazine, as well as the NFL, NBA, NASCAR and Major League Baseball.