Yahoo Fantasy Sports Already Has a 6.5 Million Member Database to Market Its DFS Product To
When Yahoo! announced it would launch a daily fantasy sports service in competition with FanDuel and DraftKings, many people wondered whether it would flop the way Google+ did. Others wondered if Yahoo Daily Fantasy Sports wasn’t some kind of beta test, because the service was launched with one week’s notice and almost no fanfare.
Early reviews of the Yahoo DFS service have been good, though. Forbes suggested the search engine’s entry into the niche was good for customers, because it would keep an oligopoly from forming. An op-ed piece on the Calvin Ayre website suggested the service was solid and the product would be a big success. The main reason Yahoo’s DFS service would work, so the logic goes, is the company’s long investment in the fantasy sports industry.
Membership of 6.5 Million
Yahoo’s fantasy sports site membership base is over 6.5 million people already, so it has a database of potential DFS gamblers with an interest in their games. People should not assume that fantasy football team owners all want to play on a daily basis, but a significant portion of them are likely to want to try the hobby. The question is: how many already have and thus own a FanDuel or DraftKings account?
Human Intelligence in Sports Content
While Yahoo lost out in the search engine wars to Google a long time ago, the search engine corporation still has major advantages in certain fields. Yahoo Finance and Yahoo Sports are two of those advantages, so the sports brand should serve it well in the coming future.
Yahoo! always has had a more personal touch when it came to the information, content, and search results its offered. That was not a good idea when it came to search engine results, but it’s a big plus when it comes to particular human subjects like sports. Yahoo simply feels more personal.
Relationships with US Sports Leagues
Also, Yahoo’s long foray into fantasy sports means it has longstanding relationships with the big four sports in the United States: NFL football, MLB baseball, NBA basketball, and NHL hockey. Those relationships should serve it well in the coming DFS wars.
Yahoo has an advantage in expanding its user base naturally, without the kind of massive advertisement costs which require FanDuel and DraftKings to find new investors all the time. Those companies are in a battle to get their products noticed on TV, radio, and the Internet. That takes a lot of capital, but Yahoo can go after customers in a different way.
DFS Product Loyalty
What makes the Yahoo challenge dangerous for its two rivals is the fact that many DraftKings and FanDuel customers are likely members of Yahoo fantasy sports leagues. They are Yahoo customers, so a number of those companies’ customers might migrate back to Yahoo in the next few quarters, depending on fan loyalty.
Yahoo has a downloadable iPhone app which contains all the sports for mobile players, so the service should be easy to interface with for smartphone and tablet computer users. If the Yahoo service is a better product than the game interface offered by FanDuel or DraftKings, it could take a lot of their customers. Marissa Mayer recently noted that Yahoo customers spend 30 billion minutes playing fantasy sports each year on Yahoo. Those are 30 billion chances customers might decide to give the Yahoo DFS site a chance.
But Is DFS Legal for Yahoo?
The real question mark for Yahoo is one of legality. FanDuel and DraftKings are private companies, which gives them an advantage in going after gray markets. Daily fantasy sports is a gray market, because the UIGEA legalized the activity through a carve-out exemption. Still, it is unknown whether the US Congress made that exemption for publicly-traded companies like Yahoo.
It might be that private companies operating with relatively small mark on the economy and pop culture might be given a pass, while a major search engine might draw too much scrutiny. DraftKings is estimated to be worth $1.2 billion, while FanDuel is estimated to be worth $1 billion. Yahoo has net assets of over $61 billion. When a search engine everyone knows starts throwing its weight around in the online daily fantasy sports industry, the US Congress might move to block such commerce. It’s all still unknown at this point.
