Dynamic Landscape
DraftKings revenue exploded from $2.5 million in Q4 2013 to $17 million in Q4 2014, but they actually lost market share to DFS leader FanDuel.
Written by Trev Rogers
I expected the big jump in revenue for DraftKings however I also expected to hear about gains in DFS market share. Keep in mind around Q2 of 2014, FanDuel CEO Nigel Eccles confidently proclaimed a 65% market share for FanDuel. DraftKings publicly balked at the number, but did not show metrics to prove otherwise.
When FanDuel reported their Q4 2014 numbers, they did so with a claim of 80% DFS market share, a truly dominant number. Myself and other DFS players thought 80% was a bit high and waited for DraftKings to present their case, they did not this time around, yet I believe they will later this year.
For FanDuel to gain an additional 15% market share in just 6 months is truly impressive, but can FanDuel keep the momentum going in 2015?
WHAT IS NEXT FOR DRAFTKINGS?
Lets keep things in perspective. DraftKings reported $30 million in revenue for 2014. That is up from just $4 million in 2013. No one can argue with 650% revenue growth, but believe me, their investors want to see market share gains.
I believe DraftKings has set the groundwork for a HUGE 2015.
DraftKings has agreements in place with Major League Baseball and the NHL, to be represented as the league’s official daily fantasy sports provider. DraftKings also recently announced deals with numerous NBA teams:
DraftKings is now the official daily fantasy game provider of the @LAClippers #ClipperNation http://t.co/qgHQsuPSRT pic.twitter.com/vgslRUB2FC
— DraftKings (@DraftKings) February 5, 2015
We are excited to announce our partnership with the @SacramentoKings http://t.co/IKMoZvwmTA pic.twitter.com/JYL0WUsGwx — DraftKings (@DraftKings) February 4, 2015
FanDuel and DraftKings are vying for partnerships with as many teams and leagues as possible. DraftKings is obviously on the offensive here, believing that agreements with professional franchises will help cut into the market share lead of FanDuel.
DraftKings recently announced a partnership with Jon “Bones” Jones, one of the biggest names in the MMA industry, to coincide with the launch of their Fantasy MMA contests. The MMA/UFC audience fits quite nicely into DraftKings target demo and should provide a bump in revenue.
In total, DFS players paid nearly $1 billion in combined entry fees in 2014 to FanDuel and DraftKings. That number was just over $200 million in 2013….the overall industry growth is staggering!
The “Cool” Factor
There is no doubt that DraftKings owns the “cool factor” over FanDuel. Their website has a modern appeal, along with a perceived less complicated qualifier to large GPP contest structure. I was also impressed with the aggressive sponsored ad campaign run in conjunction with Barstool Sports during the 2 week stretch leading up to Super Bowl 49.
Barstool Sports is the exact target demo for DraftKings to recruit players. The traffic on Barstool is off the charts and their social media antics/strategy are second to none. Below is a small sample of the partnership during Super Bowl week:
Finally, DraftKings will be the first DFS site to offer a $1 Million 1st place prize Fantasy Basketball Championship in Las Vegas this March. A $2 million total prize pool will be on the line for the 40 finalists who qualify for the event.
As I mentioned earlier, DraftKings let the 80% market share claim by FanDuel go without dispute this time around. With continued aggressive marketing tactics and explosive growth metrics, DraftKings should begin to steal some market share from FanDuel by the end of 2015.
The author Trev Rogers was employed by a daily fantasy sports website for the past 2 years and is considered a “DFS Insider”. You can follow Trev at twitter.com/TrevRogersBets for the latest DFS industry news.
