DraftKings Is Bringing Daily Fantasy To eSports

These days, it’s nearly impossible to watch any sporting event or program without seeing an advertisement for daily fantasy sports. The fantasy and gaming industry has seen enormous growth, and that trend looks to continue as one of the leading DFS providers moves into the new realm of eSports.

DraftKings announced that it will be adding eSports to its list of offerings, which includes NFL, MLB, NBA, NHL, MLS, NASCAR, PGA, and MMA. DraftKings will begin offering fantasy eSports contests on October 1, 2015 with the start of the League of Legends World Championship. Participants will be able to play for free or compete against others in cash prize leagues, including a $3 entry fee contest featuring $25,000 in prizes.

The expansion to fantasy eSports should be a huge boon to DraftKings, as League of Legends alone sees more than 27 million gamers playing per day. In addition, the eSports audience is estimated to be about 134 million people worldwide, generating more than $600 million in annual revenue. It’s easy to see why DraftKings would want to expand into this market.

DraftKings is certainly not the first to notice the immense popularity of eSports, as last year’s League of Legends World Championship in Seoul, South Korea was broadcast in the United States via ESPN3, and the final round was watched by 27 million people worldwide. In contrast, Game 7 of the 2014 World Series between the San Francisco Giants and Kansas City Royals was watched by 23.5 million people.

One major point of consideration for DraftKings is that it will also need to expand its geographical boundaries; more than 60 percent of the eSports industry’s revenue comes from Asia, while DraftKings currently only operates in North America. This means that the majority of eSports fans won’t be able to take part. At least, not initially.

“We certainly have global ambitions here and want to be operating in as many countries as possible and as quickly as possible,” said DraftKings Chief Revenue Officer Matt Kalish, “The long game here is really tied in more with our international strategy.”

DraftKings also signed deals with six different eSports teams to form partnerships that are similar to the paid deals the company signed with major sports franchises from the NFL and MLB. Sports management company IMG brokered all the deals.

DraftKings has the money for these deals due in part to the fact that it recently raised $300 from various investors, including Fox Sports. At the time, CEO Jason Robins indicated that his top priority for the money was acquiring new users. By expanding into eSports, DraftKings aims to accomplish just that.

Resources:

http://blogs.wsj.com/digits/2014/01/27/player-tally-for-league-of-legends-surges/

http://espn.go.com/espn/story/_/page/instantawesome-leagueoflegends-141201/league-legends-championships-watched-more-people-nba-finals-world-series-clinchers

http://recode.net/2015/07/26/another-unicorn-is-born-draftkings-snags-300-million-and-massive-fox-ad-deal/

http://recode.net/2015/09/23/draftkings-is-adding-a-new-fantasy-sports-option-competitive-video-gaming/

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