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FanDuel Versus DraftKings

Ed. note: this data was compiled prior to the recent news about FanDuel and DraftKings. We intend to follow the news and understand the impact on app installs and engagement.

It seems like ads for FanFuel and DraftKings are everywhere: on TV, billboards, subways and more. Both companies have been competing for mindshare, spending record-breaking amounts on traditional and digital advertising timed with the start of the 96th NFL season.

The popular new apps vying for domination of the Daily Fantasy Sports (DFS) market estimated to be worth upwards of $2.6 billion. While fantasy sports is not new—ESPN, CBS, Yahoo and others popularized the concept as the web grew in the 1990’s—recent news of FanDuel’s recent $1B valuation and Yahoo entering the space, and more show that the space is hotter than ever.

In this study, we took a look at FanDuel and DraftKing’s performance on mobile during its advertising blitz to get a sense of how well they worked—and which app did better.

Stats at a glance

  • Mobile user acquisition and engagement across these apps is highly related to advertising spend. In the first two weeks of September, DraftKings spent an estimated $32 Million while FanDuel spent $16 Million during that same period, according to iSpot.tv. While DraftKings spent twice as much, FanDuel’s install base now matches DraftKings install base, showing the efficacy of FanDuel’s marketing.
  • The number of daily sessions per active users of the FanDuel and DraftKings peak on Sundays, when a majority of NFL games are played. The standard sports season (13 weeks of NFL, 162 for MLB etc.) creates a more predictable revenue model.
  • Active users log in at least twice a day, proving the addictive nature of these type of apps.

ANY GIVEN SUNDAY

The origin story of fantasy sports starts with enthusiastic fans. The story goes like this: a few friends meet at the beginning of the football season with well-researched spreadsheets of player’s stats. Each “team owner” in the fantasy league would select players from real football teams for his fantasy team. All scores in real life count towards a fantasy team.

Instead of creating a team once a season, FanDuel and DraftKings give fans the ability to create new teams every day and week. Casual sports fans can select players for their team one Sunday and chose an entire new team the following Sunday. With a lower barrier to entry, there are more fans, which increases the daily prizes, which increases fan engagement. This viral loop is key to increasing fan engagement.

In the following chart, we see that the daily active users of the FanDuel and DraftKings peak on Sundays, when a majority of NFL games are played. Active users log in at least twice a day, proving the addictive nature of DFS apps.

FanDuel has raised a total of $325 Million and scored a $1 Billion valuation. DraftKings has raised a total of $375 Million and has a post-money valuation of $1.2 Billion. Both companies will need this money to acquire more users and engage existing users with compelling prizes and games. And both need this money to chip away at the fantasy sport market share held by Yahoo and ESPN.

Graph showing the daily active users of FanDuel & DraftKings as of September 2015
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THE CHASE FOR YAHOO AND ESPN

Yahoo and ESPN were in the first iterations of online fantasy sports. As a result, both Yahoo and ESPN have substantial install rates among 7Park Data’s large panel of users. DFS apps like FanDuel and DraftKings want to lure players away from existing platforms like Yahoo and ESPN and convert them into customers. The format of the offering – daily and weekly bets – allows users to cross into FanDuel or DraftKings territory. The number of existing players, coupled with new players, helps explain the record investments for and valuations of both DFS companies.

Chart showing U.S. installed base of Yahoo Fantasy Football app and ESPN Fantasy Football app between August 2015 and September 2015.
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THE USER ACQUISITION GAME PLAN

There is no denying that DFS engages fans. But first, they need to acquire more users. And both of these companies have broken records with their advertising spend. In the first two weeks of September, DraftKings spent an estimated $32 Million while FanDuel spent $16 Million during that same period, according to iSpot.tv. Both FanDuel and DraftKings investment in advertising paid off.

According to 7Park data the percentage of users who had the DraftKings app installed was greater than the number of users who had the FanDuel app installed. FanDuel is about even with DraftKings by September 20th.

Chart show daily U.S. installed base of DraftKings and Fan Duel as of September 2015
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FANDUEL SCORES

DraftKings spent twice as much money on T.V. advertising than FanDuel during that two-week period. However, by September 18th, FanDuel’s install base matched DraftKings install base, showing the efficacy in FanDuel’s marketing.

FAN ALIENATION

The NFL season is only in its third week – with eight more weeks in the regular season. If DraftKings and FanDuel continue to see increases in installs and usage, we will continue to see ads.

However, they are in a precarious situation. Football fans are already lamenting the frequency of these T.V. ads. Both companies need to avoid alienating T.V. viewers while promoting their apps. If they fail, we might see a decline in their adoption.

Tweet from Tom Ley: "Would a federal law banning all FanDuel and Draft Kings ads be illegal? Probably, but we should think it over." - September 13, 2015
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POTENTIAL LEGAL PROBLEMS

Recently, the New York Times reported that employees of DraftKings and FanDuel were using information not available to the public, to build their teams on the other DFS sites.

Unlike online poker, daily fantasy sports were not specifically banned in 2006 with passage of the Unlawful Internet Gambling Enforcement Act (UIGEA). Leaders in the NFL, NHL, MLB, NBA and NCAA outlined their argument to congress in a letter from 2006. It requested the UIGEA to continue to allow what was already legal — namely fantasy sports. However, in 2006, DFS did not exist.

Needless to say, any changes to UIGEA will greatly impact the install penetration and engagement of these DFS apps. And it also might encourage more usage of traditional fantasy sports apps like Yahoo and ESPN. As more information is released and laws change, we’ll be updating the 7Park Data blog with app engagement and retention data.

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