A couple of days ago, I tried to think through the pros and cons of building a baseball simulation game.
Today, I'm working through another entry on my Big List of Baseball Project Ideas: Fantasy sports league software.
Before you read this, you should probably read my previous post about the history of online fantasy leagues. I think it's important to understand the fantasy landscape to see how a new site could fit into the mix.
Just to recap that post, I argued that successful fantasy sites have required some combination of innovation and marketing. Today, I'll be covering that combination as differentiation. Differentiation is how your site stands out (innovation), and the way you describe it (marketing).
In my previous post, I also stated that prize leagues were not the only way to make money, and maybe not even the best way. So, today, I'll try to get into some options for monetization of a fantasy league site.
With multiple free options available on the market already, I think any new league software would need to do something different to make people choose it over the others.
As I mentioned in the previous post, several niches have already been staked out by existing sites: Ottoneu claimed the analytic audience, NFC targeted high stakes leagues, etc. You've got to carve out a new niche.
Some ideas:
There are passionate fanbases for Japan and Korean baseball leagues, but neither of those have good options for fantasy. It seems like covering these leagues gives you an easy path to being the best (and only) option.
Of course, you could still do the big North American sports alongside this. The platform is mostly the same; you just need to get the different stats. But these other leagues let you get yourself established with customers.
You could also try to come up with some new version of fantasy sports, something not offered at the typical places. Guillotine or vampire leagues would be ideas in this general direction, but you could stray even further from the traditional rules and scoring.
Untested ideas may be no good. So there's risk involved.
I've always liked the idea of going the open source route. For people who don't consider themselves to be marketers, the label of open source does a lot of marketing heavy lifting for you.
People see you as passionate for an idea and not just trying to make money, which creates more generous word-of-mouth. If people contribute to an open source project, their sense of ownership leads them to promote it.
Open source can also be the key to unlocking the other doors of differentiation mentioned above. If someone wants KBO fantasy leagues, they can add it. Someone has a new rule idea? They can add that, too. Part of the differentiation of an open source product is this positioning: The platform where you can build anything that the other sites don't handle.
How do you make money from something you give away for free? This is a common misconception of open source, which actually has lots of monetization options, including all of the ones in the next section. Let's step through them:
People are used to free fantasy games, but, the truth is, running a site is going to cost money. (That's even assuming we hand-wave away the development cost as a passion project.) How are you going to run a profit on fantasy leagues, or at least break even?
First off, you could just make people pay for leagues. Or, maybe it's freemium: Basic settings are free, but advanced settings require users to pay for a premium league.
The problem: Why would they pay for your site, which, presumably, is missing features that the other sites have added over the years? You better have a good hook to differentiate your product.
Ads are the classic monetization model of the internet, the MO of Facebook, Yahoo, and Google.
You do need a certain level of scale for ads to start working. That means you may need some seed money to get things rolling until your traffic is high enough to benefit from ads.
I'll mention this one here because others do it, but I don't think it's an especially good option.
This is the ESPN Insider model. You have a free fantasy game, but you put your fantasy advice and some tools behind a paywall. Yahoo has recently added this on as part of a Yahoo+ subscription, too.
I personally think it makes more sense to have your content creators (if you have them) give the content away in support of your product. They are your brand ambassadors, and you want people to be aware of them.
Here's an idea: You produce the software, but license it to others to use for their own games. You could even charge for customizations and support contracts.
This nicely lets you avoid the issues with state-by-state regulation of fantasy: that's your customer's problem, not your's.
You are also exchanging hundreds or thousands of low value customers (i.e. people playing fantasy) for a small number of business customers who each pay you a lot. B2B is easier to B2C, but losing a single customer is a bigger hit if you only have a few.
Some other legitimate downsides: Are there people who are trying to build fantasy games? Will they stay in business long enough to be valuable customers?
One final option that applies to the open source league idea: You let advanced users host the leagues themselves, while others can choose to use your hosting service. If you are familiar with WordPress, it's like WordPress.org (the free software) and WordPress.com (the hosting provider). WordPress.com will host your site for free (with ads) or as a paid service.
That's the nice thing about open source: Every option is possible for trying to make money from your product. Your hosting service could make money via ads and from paid leagues. You could white-label the software (offering a commercial license instead of the AGPL). You open up several revenue streams.
If you want to collect money for fantasy, you are going to have to deal with every state's regulations.
You will also find that companies you need for business services have policies to stay away from anything fantasy-related. I've seen that already with DraftKick: MailChimp doesn't want to send emails about fantasy. Stripe doesn't want to collect money for fantasy.
The early entrants had an advantage in that they only had to design for desktop computers. (They did, however, have to do deal with vastly different browsers, and that is a problem that has mostly gone away.)
Today, people expect apps (both iOS and Android) in addition to a desktop experience. A new league site will almost require multiple codebases from the very start. (Although some, like Ottoneu, have avoided this so far.)
Stat providers are going to be a big fixed cost for most fantasy sites. How do you deal with that when you aren't making money at the start?
Also, sports stats are weird: They are freely available on hundreds of sites, but each of those sites is paying money to a provider (probably Sportsradar) for them.
My opinion is that you could get away with web scraping the stats you need in the early days. Do it politely: Instead of every league requesting data from some external source, you make the request once and save the results on your own server, then have all of your leagues make the request to your own server.
When I had finished researching and writing about building a sports simulation game, I ended up feeling a bit less excited about giving it a shot.
However, after writing about this fantasy league idea, I still feel optimistic. I'm not yet at the point of actually starting anything, but I think it's worth more thought.
What's the difference?
I'm trying to figure that out. Maybe it's my sense that, although they can attract a multi-decade following, the ceiling of simulations is still pretty low. It's hard to get it beyond a part-time project, and most of them remain further on the fringes than fantasy sports. (No one is talking about their Pennant Chase league on Twitter.)
There's also the issue of incumbency, where I feel like OOTP has quite a devoted following at the top of the simulation heap. On the other hand, people constant complain about the imperfections of all of the fantasy sites. Making the best fantasy platform actually seems easier than the best simulation game.
Finally, there is the matter of differentiation that I discussed above. I think I see a clear path to building a differentiated fantasy platform, but I'm less sure about what a differentiated sim looks like. My main thought is to make it more casual than OOTP, but there are lots of ways to go about that.
If you're still tracking your draft with a custom spreadsheet or even just pen and paper, you need to try DraftKick.
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Hi,
I'm Mays. I've been playing fantasy since I was in high school (over two decades ago).
My speciality has always been player valuation—converting player stats into rankings and salary values. VBD for fantasy football? Rotisserie z-scores? We go way back. In 2009, I started Last Player Picked, a site that generated fantasy values customized for your league.
You can find me on Twitter at @MaysCopeland or email me at [email protected].