Once upon a time in world where people typed letters on typewriters and watched television on three networks, Bill Winkenbach introduced his friends to a game he devised called fantasy football, which allowed fans to create statistical teams using real players. Winkenbach, a limited partner in the Oakland Raiders of the fledgling American Football League, held his first-ever fantasy draft in 1963.
Flash forward almost half a century, and fantasy sports is big business — so big, in fact, that major networks like ESPN, Fox and CBS as well as niche networks like College Sports TV and Speed Vision have all staked a claim in the fantasy realm. They contend that virtual leagues have a solid grounding that can generate revenue, boost television ratings, drive traffic to their Web sites and build brand loyalty — all with that most coveted of demos, affluent and educated adult men 18-54.
“The networks now understand how popular these fantasy games have become,” says Steve Sternberg, executive vice president and director of audience analysis for the media-buying firm Magna Global. “Certainly with the major sports, they can generate big revenue from fantasy sports.”
And yet clearly, the network’s sports fantasy efforts aren’t at the same level of development. Greg Ambrosius, president of the Fantasy Sports Trade Association and editor of Fantasy Sports magazine, says he believes CBS can and must do more to leverage its CBS Sportsline Web site, which CBS parent Viacom Inc. purchased outright last year.
In his opinion, Fox is playing “catch-up” and is facing pressure to strengthen its fantasy output because “they got involved late in the game.” NBC, which will televise National Football League games next year, is just plotting its entry, he says. “They are looking into it, and they do need to jump in — any network doing sports needs fantasy games on their Web site.”
There are two main economic models for fantasy sports, and most networks have tried them both. While independent fantasy league Web sites must charge users, the networks have such broad reach that their Web sites can choose between pay-to-play or free games that attract more users, generating revenue off advertising. Sportsline was the first to try the free model in 2000. But in 2002, it went back to charging for its leagues. Others followed suit, but this year ESPN and Fox returned to the free route
“Companies were racing to find revenue when the advertising dried up, but now the ad market is heating up and dollars are shifting back to online,” says Brian Grey, senior vice president of Fox Sports Interactive.
To reap those dollars meant snatching the widest possible audience in a highly competitive field, says John Kosner, senior vice-president, ESPN New Media. “Advertisers want the big numbers,” he says. Although he notes that the Web site has upsell opportunities; it charges for analysis and information and offers more sophisticated pay-to-play versions.
CBS Sportsline is sticking with the pay-league model — for now. “We believe the pay leagues are a much higher bar to participation, and thus give advertisers more confidence in what they’re getting,” says CBS Sportsline general manager Steve Snyder .
But he says now that CBS has taken over, and switched Sportsline from the CBS Sports unit to CBS Digital, their focus might change. The network is doing extensive research into what the fantasy leagues can best accomplish.
The advantage of big fantasy audiences extends beyond the simple math of direct revenue. Snyder says the average media user visits Sportsline four to six times monthly while the fantasy user comes in 15 to 20 times. “They know that everything else is here, so they come back for all their sports news,” Snyder says, noting that boosts ad revenue for the entire site.
Magna Global’s Sternberg says that fantasy games deepen users’ interest in watching a wider variety of live games. He notes that a New York Giant fan, for instance, might watch a Kansas City Chiefs-San Diego Chargers match-up, because he’ll say, “I’ve got one of those guys on my team and I want to see how he does.”
Of course, there’s always the possibility that a Sportsline fantasy player might do his or her extra game viewing on Fox. But given the networks’ heavy investment in sports, it’s all helpful — particularly for ESPN. “Any growth of interest in sports is good for ESPN,” Kosner says, adding that ESPNews has become a particular favorite of fantasy junkies.
While most of the emphasis is on football and baseball, and to a lesser extent basketball, other sports are attracting fantasy players — NASCAR is among the fastest-growing, Ambrosius says, while golf has also adapted fairly well to the realm.
CSTV has introduced college football fantasy leagues but, according to CEO and president Brian Bedol, they’ve had to adapt to the realities of the college game — where players only stick around a few years — and the National Collegiate Athletic Association’s rules, which allow only for the drafting of a school and a position in a fantasy game (for example, Oklahoma University’s quarterback or Pennsylvania State University’s fullback), but not the specific name of a student-athlete.
ESPN has even had fantasy leagues for bass and trout fishing, although the latter seemed to be too small a niche to continue. “We’d like to serve as many audiences as possible but we can’t put the same resources behind a niche sport,” Kosner says.
CBS Sportsline wouldn’t take the plunge on every sport, Snyder says. But he says golf is a natural fit, as CBS televises it. And the site might pursue tennis for the same reason. (CBS has even offered fantasy games for fans of reality shows like Big Brother.)
Grey says that since Fox is just getting into this world it made sense to start with football and then baseball — which Fox has television rights for — but basketball could be next. Since Fox Sports Net regional outlets reach a wide basketball audience, “We’re exploring other games but we need to build credibility first.”