Fantasy sports firms eye billion-dollar reality in Asia
High smartphone usage and an existing eSports ecosystem could bring mainstream appeal in the region for an industry that is hungry for new participants
New entrants to Asia Pacific’s fledgling fantasy sports industry are counting on the region’s active smartphone usage and growing eSports ecosystem to turn the virtual playing field into a multi-billion dollar reality.
About to enter its second year of operation, fantasy sports firm Ballr has just finished a successful soft launch. It has 25,000 users, mostly from Asia, and is targeting a community of up to 100 million by year-end 2018. It has been expanding its footprint in the region this summer by teaming up with Manchester United’s legendary “Class of ’92.” Five former United players, including Ryan Giggs and Paul Scholes, flew to Asia to promote the app across Hong Kong, mainland China, Cambodia and Thailand.
Ballr has also announced high-profile partnerships with football organizations including Italian league-winners Juventus, Spain’s La Liga, and retail groups and broadcasters. It has positioned itself as a free gaming platform that enables sports fans to predict outcomes in real-time with the chance to win rewards provided by licensed partners. It makes money through advertising revenue, which it splits with broadcast partners.
“It’s a much younger business in Asia, so we’re having to start with a really simple game to increase engagement,” said Sam Jones, founder and CEO of Ballr. “It would be naïve to put in place a really complex fantasy sport and then expect 15 countries to immediately get it.”
“It would be naïve to put in place a really complex fantasy sport and then expect 15 countries to immediately get it”
The fantasy sports concept dates back more than 50 years when small collectives of sports enthusiasts would compete against one another by drafting teams of real-life professional athletes and accumulating points based on their performances. It became more mainstream after the internet boom in the 1990s when scoring mechanisms were digitized and the pool of potential participants expanded beyond just friends and family. More recently, a new subset called daily fantasy sports (DFS) has become popular, with participants often wagering real money on short-term outcomes.
There were an estimated 57.4 million fantasy sports players in the United States and Canada in 2016, double the amount from just five years previously, according to the Fantasy Sports Trade Association. Players on average spend US$556 per year on game-related costs, such as entry fees and research materials. Meanwhile, one of the largest DFS operators, FanDuel, reportedly told investors in January it had a fully diluted equity valuation of US$1.2 billion.
Importing the fantasy sports craze to Asia Pacific could potentially yield even larger financial rewards in the future, given the region’s vast population and appetite for gaming. It might also lead more people to participate in real-life sports and bolster the ambitions of China, for example, in its quest to be a football superpower by 2050.
Ballr hopes to expand quickly by serving as an extension to what is actually happening live on the pitch. Users select a gaming event and a player to follow for a five-minute period. Players gain or lose points for every event involved in the games and users can view their rankings on a real-time leaderboard. Going forward, Jones plans to enable more social functions so users can communicate during the game and exchange picks.
“What’s great about this region is the data around smartphone penetration,” Jones said. “One of the things we are going to have to do is build fantasy into the screen so our tagline doesn’t become sport’s second screen but, instead, sport’s only screen.”
Smartphone internet traffic has surged in Asia, increasing 293% in India, 222% in China and 120% in South Korea over a three-year span ending in December 2016, versus a 69% jump in the United States, according to Adobe data.
Meanwhile, smartphone usage has started to eclipse traditional entertainment mediums. In Indonesia, the average daily internet use from phones tallies nearly four hours, for example, versus less than the average of two-and-a-half hours spent watching television, according to a January report from social media manager Hootsuite.
The popularity in the region of eSports – essentially online video game playing – is another potential tailwind that could boost the appeal of fantasy sports. Malta-based fantasy football operator Oulala says that DFS in Asia could eventually catch up with North America and is actually growing faster than in Europe because of millennials’ familiarity with virtual games like eSports.
“One of the things we are going to have to do is build fantasy into the screen so our tagline doesn’t become sport’s second screen but, instead, sport’s only screen”
“Asia is a massive market that offers plenty of stimulating prospects for the future,” said Valéry Bollier, co-founder/CEO of Oulala. “DFS is simply responding to the needs of the new generation that is already playing eSports.”
China and South Korea will account for a combined 22% of US$696 million in global eSports revenues in 2017, according to a February report from Newzoo, a gaming market intelligence provider. The report said more than half of eSports enthusiasts this year will be from Asia Pacific.
One of the challenges fantasy sports operators in this region will need to navigate is the complex regulatory environment.
“In order for our sector to grow efficiently, there needs to be a structured legal framework – a need that has not yet been met,” said Bollier. “We are looking to convince local authorities that DFS presents an opportunity for them.”
Bollier visited Macau in May to speak at an industry gaming conference and also met with local regulators. He said Oulala has been developing partnerships around the world, including in Asia, and would announce more details at the start of the new football season.