Some of the problems experienced by Yahoo in its entrance in the daily fantasy sports industry resemble those that might be made by an online gaming startup rather than a giant internet corporation.
This spring, Yahoo announced it would be getting into the daily fantasy sports market — a natural crossover, as it is one of the giants of fantasy sports of the season-long variety. At the time, it sounded like CEO Marissa Mayer had big plans for DFS, according to her statements in an earnings call:
We believe this is an area where Yahoo! can and should compete. Over the past year, we have been working hard to create our daily fantasy offering, a unique take on this game genre to bolster our leadership in fantasy sports.
Her revelation that Yahoo has been working on DFS for a lengthy period of time brought with it expectations that it would be launching a fairly polished product.
Then, Yahoo’s DFS launch came suddenly earlier this month, without much warning. At the start, people were simply excited that Yahoo had entered the space. But that sentiment didn’t last that long.
The start for Yahoo was positive enough, with contests just based on Major League Baseball. There was a big freeroll that filled, and a $50,000 guaranteed contest that Yahoo offered players willing to deposit. But the warm, fuzzy feelings about Yahoo dissipated relatively quickly. For instance:
Still, despite all that, no one would have termed Yahoo’s launch a debacle. It was getting its product in front of users before the all-important NFL season, which is when the rubber meets the road for DFS operators, and when mistakes can’t afford to be made.
Then, more problems started surfacing.
After the initial rollout, Yahoo started having other issues that attracted unwanted attention:
It’s hardly the early track record one would expect for the internet giant, given that it wasn’t reinventing the wheel and was following the gameplan for DFS that had been laid out by FanDuel, DraftKings and others.
Clearly, not all the news hasn’t been great for Yahoo. But it’s still more than capable of being a major player in the DFS industry, even if that doesn’t come immediately.
Eilers Research has predicted that Yahoo is likely to only generate $5 million in revenue this year with its DFS product, which would be an earth-shattering number for a DFS startup not named Yahoo. Revenue at both FanDuel and DraftKings this year will exceed $100 million.
Yahoo has a number of advantages in the DFS space that its competitors don’t — like easy access to season-long players for attempted conversion and a media platform (its own) with which it can acquire players.
With NFL season about a month away, we’re also still waiting for PokerStars to potentially roll out its own DFS product. With Amaya/PokerStars’ DFS status unknown for now, the industry is left watching the arms race between DraftKings and FanDuel — which are now both valued at over a billion dollars.
And while that is going on, Yahoo will attempt to make its claim for No. 3 in the space and build on that position in 2016 and beyond.