Yahoo launched a daily fantasy sports site on Wednesday, a pay-to-play offering intended to complement the season-long fantasy leagues it offers people for free.
It's a business that already has two major players: FanDuel and DraftKings. Both companies are well funded and quickly growing their user bases and revenues. Daily fantasy has turned into a lucrative business, which is undoubtedly why Yahoo — a company that used to dominate the world of fantasy sports — wants in on the action.
The products for all three companies work exactly the same. You can go to any site and pay a few bucks to draft a team and play a stranger head-to-head in a one-day fantasy contest. The winner takes the pot, minus a small cut for the facilitator, and the whole thing starts again the next day.
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Yahoo does offer one key differentiator though. If you already have a season-long fantasy team on the platform, you can put money down and go head-to-head against other people in your league using your existing team. Essentially, it's a way to make side bets throughout the season against your friends. It's a nice touch by Yahoo. It requires minimal effort from the user since his team is already in place, and offers a way for Yahoo to take advantage of its existing user base so it's not starting from scratch.
The bad news for Yahoo is that it is quite literally late to the game. A big part of the business for both FanDuel and DraftKings has been league and team partnerships that give the companies exclusive in-stadium advertising rights in addition to harder-to-measure benefits like brand association.
FanDuel and DraftKings have been divvying up America's major sports teams for over a year now, and many of the teams are already accounted for. The same goes for some major media properties. DraftKings, for example, just inked an advertising deal with Disney's ESPN for exclusive advertising rights on ESPN properties beginning in 2016.
The challenge moving forward for Yahoo is that many of the fantasy sport diehards have already joined one of the other platforms, and getting its product in front of those who haven't could be a challenge given the exclusive deals already in place.
It doesn't appear that this head start will stop a nice rivalry from forming, though. (FanDuel and DraftKings already go pretty hard in the paint, as they say.) On Wednesday, FanDuel was a bit surprised to find that Yahoo's product looked a lot like its own.
"If imitation is the sincerest form of flattery, Yahoo has a major crush on FanDuel," company spokesperson Justine Sacco told Re/code. Let the games begin!
—By Kurt Wagner, Re/code.net.
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