Fantasy Sports Business: Not always a Field of Dreams
The landscape of the fantasy sports industry is changing, how will you adjust?
Watching the Field of Dreams with Kevin Costner, Ray Liotta and James Earl Jones is always a good idea. If you are reading this and have not seen the movie, STOP RIGHT NOW and go watch it. It is must see viewing for every sports fan. Field of Dreams is the story of an Iowa farmer who hears voices commanding him to build a ball field to bring the 1919 Chicago White Sox back to play baseball. The voices say “If you build it, they will come.” It is the oldest saying in the fantasy sports industry and for MANY years it was absolutely true. Most of the biggest successes in my career were exactly that. We had an idea together. We built it together. The fantasy sports players found it and liked it. Easy, right?
Well, like Dylan wrote, the times they are a changing. As the fantasy sports industry matured there is a ton more involved with making a fantasy sports product and delivering it to market than this simple concept. After I left NBC Sports Group in November of 2011, my phone started to ring often with entrepreneurs who wanted me to take the risk and EXECUTE their "revolutionary" ideas. Here is how a typical call would start:
Caller: “Hi. I found your name on the FSTA website and I looked up your website. I have a new revolutionary fantasy sports concept that I think you will want to build for me. I am sure you understand that I am going to need you to sign an NDA (non-disclosure agreement) so that we can discuss it.”
So you see the passive aggressive way with which the idea is not only positioned as new and revolutionary, but my company would want to do all the work. Well that leads me to some lessons that I have learned in the last two years in our changing industry. I am not saying that below is the formula to build a business in the fantasy sports industry. It is simply some observations that I laid down on paper in a stream of consciousness way. Enjoy or discard. Hope you enjoy.
No one pays for ideas, only executions
Ok. So maybe I am a little cynical having been told so many times that people had the next big idea in fantasy sports. Signing an NDA for ideas that have likely already been done always felt like the courtroom scenes from the movie Chicago. Lawyers defining what the clients will do to make a buck and swirl the media. The first ten ideas were all things that had been done before and for one reason or another had failed. How many times can someone try to have a stock market using real players? The fantasy sports industry has seen this more than five times. Funny thing is that the patent office will give out patents for these things and people will believe that they invented the best thing since sliced bread. BTW, what is the best thing before sliced bread? That is of course a Steven Wright line. So, here is the advice...don’t talk about it. Do the homework on your idea to make sure that it is original and then start to work on the plan. Planning is critical to success.
Measure twice, cut once – Making the plan
The biggest mistake that people make is that they start building their fantasy sports product or site without understanding the business plan. They tell me that they know that fantasy players want their concept because they asked five of their friends who are all die-hard fantasy players. That is when I ask the question that you should ask: What quantifiable research do you have that insures that your five friends exactly reflect the 36 million people who play fantasy sports? So, do the research to be sure that what you are building is what people want. Honestly, I left NBC Sports Group at exactly the right time. The fantasy sports industry is booming and a lot of that is on the backs of the daily fantasy sports space. There were as many as 54 companies that ran daily fantasy sports games for football in 2013. Many of my calls were to ask if I could build, manage or market a new and innovative daily fantasy sports contests site. Every time this happened, I almost felt bad for the person who contacted me. How would they compete with well-capitalized companies like Fanduel, Draftstreet and Draftkings? What was their secret sauce?
Honestly, who am I to judge?
So, I gave them advice as best I could to help them avoid pitfalls that had happened to me, but frankly the fantasy sports industry has changed so drastically, like Paul Pierce, I am a dinosaur. So, I studied first. I learned everything I could about the daily fantasy sports space. I analyzed everything I could find and that is why Fantasy Alarm is so hyper focused on delivering content, features and products/services that support the daily fantasy sports industry. It is BOOMING and there are no indictors that it will stop. The daily fantasy sports games simply make the games more fun to watch.
So, when you make the plan, you don’t need to make a 30-year plan like in Now You See Me, a five-year plan will do. Also, no industry is linear and your plan should have built-in potential pivots or expansions to more revenue streams. Never have your business rely on a single revenue stream. NEVER. Balance is key in any digital business. You must have multiple revenue streams or huge financial backing to be able to survive changes in the market economy.
Location, Location, Location
One of the most important things you will do is select a URL for the product or website. There are dozens of theories on this. One business strategy says if you create brand confusion with a market leader, you can attract their customers. That is DUMB. That is like McDowells in the Eddie Murphy classic Coming to America. Really? A large percentage of people who have contacted me about a new and innovative fantasy company had either the word “roto” or the word “draft” in their domain. That is a good way to get lost in the fantasy sports industry. There is even a “Rotodraft.com”. So there are a number of ways to select your domain. If you are well capitalized and will promote like crazy a name that no one will forget, you can go with Yahoo! or Google. There are many who use the function of the site to tell what the site does. That is what FantasyAlarm.com does. We are about loud and alerting you of what is happening so you can make smart decisions. The strategy I liked the best over the years was from an old acquaintance of mine, Trip Hawkins, one of the founders of EA who said you should take something technical and marry it with something that makes you FEEL good. Hence, Electronic Arts and his company after that…Digital Chocolate. So, think about the domain carefully. This is what will define you for the existence of your company. Make sure people will remember it. Make sure people relate to it. Make sure people want to talk about it.
Know the audience –style, substance or both
Here may be the most important thing to remember about any website. Will Leitch said it while he was with DeadSpin. It applies to everything in life too. “Everyone wants to be someplace where they belong.” I find this to be incredibly true. Also true with your fantasy sports site. Understanding the audience and making them feel like they “belong” is critical to them becoming a repeat user. So, understand who you are making products/services for. Understand what makes them tick. Listen to them when they give you feedback and make an effort to create an environment that makes them feel smart and important.
Distribution - driving audience
What good is a great product, if no one uses it? Like Midnight in Paris with Owen Wilson. Great movie? Yah…like eight of you saw it. Well, this has to be a key focus to your plan. Getting eyeballs on your product is important. Here are a couple of ways to do that inexpensively:
- SEO and Google Ad Words – Make sure you build in a way that allows search engines to index your pages and drive audience. Buy targeted keywords that reflect your brand and differentiators.
- Pick Your Friends - Partner with companies that have your audience, but don’t have a product like yours. Make sure that you try to make partnerships such that they are 50-50. Every other kind of relationship is Master/Slave or Executioner/Victim. Those kind of partnerships don’t last long. You will be judged by who you are partnered with so consider that carefully before seeing dollar signs or being sold the dream. Make sure the people in charge are good people who reflect the values you want associated with your company.
- Content and contest – If you build a content site or products, consider having FREE content or contests to drive daily engagement. If you are building a contest company, it is critical to have a content arm to create continued excitement surrounding your game.
- FSTA can help - Spread the word in the fantasy sports community at FSTA conferences or within FSTA newsletters. The President of the FSTA is GREAT at highlighting new things within fantasy sports and you can get your word out to the fantasy sports community by keeping Paul Charchian in the loop.
I Want Answers!
Unfortunately, unlike a good movie, the above is not complete. It would take volumes to explain all the ins and outs of starting your own fantasy sports company. One thing that is important about starting a company in fantasy sports is that it is a lot different than starting in a lot of other industries. This is a brethren. When people start a company, they have read “Art of War” or Jack Welch’s book or even Steve Jobs’ book and think that cutthroat is the way to do business. I cannot tell you how many times I have heard in the last two years: “I am going to do something disruptive in the fantasy sports space.” Well, come in with that attitude and you will be disruptive all right and firmly on the outside for a long time. So if all this seems like crap and you want to come into fantasy sports by simply building a daily fantasy game site exactly like all the others with no plan for differentiating, adding content or getting distribution. I have one thing to say to you...in the words of Col. Nathan R. Jessep in A Few Good Men…