Yahoo expands into the daily fantasy sports space

Taking on FanDuel and Draftkings, Yahoo comes in with more than 56 million existing fantasy players

Yahoo has been in the fantasy sports business for a very long time, nearly two decades. In my younger days, I was a member of that community. I played fantasy baseball, which is a hell of a commitment. I never played for money, just for fun, but it became such a slog that I had to eventually give it up. Playing a whole 162 game season was just too big of a time commitment.

That seems to be the prevailing thought for many fantasy sports fans, and it has led to the rise of daily fantasy leagues, and big companies like FanDuel and DraftKings. I'm surprised it took as long as it did, but Yahoo finally saw the writing on the wall and it has now done what it should have done a long time ago: it copied that idea.

The company announced the launch of Yahoo Sports Daily Fantasy on Wednesday, giving its users the option to compete with their friends and win cash on a daily basis, rather than having to play a whole season.

Yahoo says that it is now "the first major sports site and the only technology company of its scale to offer its own Daily Fantasy experience."

It also stressed that it is the only company that will now offer Daily Fantasy, Full Season Fantasy, and real-time sports news and scores.

"For more than 16 years, we’ve built the best fantasy experience for our fans. Our users spend nearly 30 billion minutes a year playing fantasy sports on Yahoo, and today we’re thrilled to introduce a daily fantasy experience designed for the modern fan,” Simon Khalaf, SVP Product and Engineering at Yahoo, said in a statement.

“The growing popularity of Daily Fantasy games is a fantastic opportunity for us to bolster our leadership by providing our millions of existing fantasy users as well new fans out there with a unique take on this game genre."

Despite coming into this space a little late, Yahoo's has an inherent advantage: it's sheer size and numbers. Yahoo's fantasy sports players grew 40% in the last year, hitting more than 56 million across the U.S. and Canada.

That is not to say that it won't have competition at all, with two major players having already established themselves.

FanDuel has over 12,000 leagues open every day, with over $10 million in real cash prizes paid out every week. The company says that it now represents 65% of the daily and weekly fantasy sports market.  In 2014 the company paid out more than $560 million to users and generated $57 million in revenue.

It also boasts partnerships with brands that include Yahoo, ESPN, CBS, NBC and the Orlando Magic.

The company has raised $88 million in venture capital, including a $70 million round in September of last year. Investors include Shamrock Capital, NBC Sports Ventures, KKR participating and existing investors Comcast Ventures, Pentech Ventures, Bullpen Capital, Scottish Enterprise, and Richard Koch.

DraftKings, meanwhile, currently has over one million users, and several hundred thousand monthly active users, and its growth can be seen in how much it has been giving out in prizes: In 2012, there was $5 million given out, a number that jumped to $45 million in 2013. That number jumped to around $300 million in 2014.

Last August, DraftKings raised $41 million, giving it a total of $75 million in total. The company was said to be raising another $250 million from Disney and ESPN this year; that didn't happen, but it did sign a dealto get exclusive rights to advertise fantasy sports on Disney’s ESPN properties starting in 2016.

Both companies are said to be potential IPO candidates, perhaps next year. 

This is a good time for Yahoo to be getting into daily fantasy sports, as the entire e-sports category is on the rise. Companies in the e-Sports and game-streaming categories have raised just over $295 million since the start of 2010. The most amazing part: that over half of those deals, a total of 56% of them, have come since, you guessed it, September of 2014. It is not a coincidence that that just happens to be when the biggest deal in this entire category went down, when Twitch was acquired by Amazon for nearly a billion dollars.

There was $37 million invested in 12 different deals in the space in the second quarter of this year.

(Image source: elitedaily.com)