Can Fans Handle More Fantasy? Teams Should Find Out

Nobody can debate the power of fantasy sports and the value of the marketplace, currently dominated by football. Following typical economics, as customers showed their appetite for more fantasy, competitors have flooded the market with countless products, each claiming a different fantasy experience, or unique prizes. In the end, most of the products are similar and ESPN and Yahoo continue to dominate because of their established brand and unmatched scale.

However, one area I’m surprised content producers have not yet fully exploited is team-based fantasy games or contests linked to in-venue or in-game viewing. Football aside, other major sports have room for growth. In fact, basketball and baseball participation remains flat or down the past few years, so each could use some innovation to invigorate it. Further, the local nature of these sports lends themselves more to team-based games involving their home team and maybe specific opponents or rivals.

The concept aligns with the current movement for teams to nurture a community. Nothing stimulates engagement more than fantasy, so if teams can steer that engagement to their own websites, broadcasts, and live games, it could lead to indirect benefits in key revenue streams, in addition to creating a new branding platform. Further, teams control the assets (players), the arena, at least have a significant say in television, and have a complementary web presence. With this combination of assets teams could activate fantasy in a compelling manner through multiple distribution channels and have real, coveted prizes (locker room visits, luxury suite, road trip) with access that other fantasy outlets can’t offer.

Thus far, most teams and leagues have taken a backseat, allowing media and retail operations to claim much of the value they create. It’s time for teams to become more progressive, be willing to step out and be innovative. We can think of any number of ways to implement the game, that’s not the hard part. Making the decision to do it, marketing it the right way, and executing well are the keys.

Conversely, if teams don’t act soon, media outlets with focus shifting toward local will jump on it. ESPN <Fill in the City> already possesses the know-how and operations to extend fantasy to city and team levels. CBS can leverage its local radio stations to do so as well. It’s only a matter of time for RSNs finally to move on this opportunity they have sat on for years, especially with the ESPN putting the competitive pressure on.

Maybe the fantasy market truly is saturated, and fans simply can’t handle more. But, if I’m running team marketing or business operations, I’d rather find that out rather than let someone else cash in on my assets once again. A few small shops have started to poke around with Facebook apps (Watercooler), and a rogue game or two has emerged here or there, but when the teams or major media entities make the move, then it becomes serious.

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ESPN Makes Local Splash, While CBS Flies Under the Radar

Last week’s confirmation of the inevitable – that ESPN will expand its locally focused web sites into additional major markets provides a major threat to the digital component of RSNs and seriously jeopardizes the long-term sustainability of local sports coverage in newspapers.

However, lost amid the ESPN announcement was CBS Radio announcing the launch of local sports stations in DC and Boston. CBS Radio already has the leader in NY, and established stations in Philly and Baltimore, giving it a stranglehold in the sports crazy Northeast and Mid-Atlantic. Its foot print extends to Chicago, Detroit, Dallas, and Houston among top markets. So you say talk radio is dying medium. Not quite, in fact, if CBS gets it right, they will be right there competing with ESPN on multiple fronts.

First off, radio is not exactly a dying medium across the board. Sports talk carries that special level of fan engagement that the web tries to recreate, but is unable to always capture the passion and spontaneity of live radio. Further, live radio broadcasting of games is an art form, sports version of fine literature. Plus, unless you are in front of a television (given the lack of mobile streaming) it’s the still the best option, so talk radio and radio rights to team games still have value. Look at the latest NY ratings, WFAN actually increased its numbers almost across the board.

Though not strongly integrated with radio, don’t forget CBS has a Top 3 web presence. If they can integrate it tightly with the web, similar in strategy but maybe different in execution to how ESPN is setup, put some marketing power behind it, and improve the streaming interface, then you may have a formidable setup. The integration opens the door for locally focused sites to compete with ESPN’s move. The radio stations have already created personalities with local followings in each city. CBS can leverage simulcasts, podcasts, use the talent for short-form video, and easily integrate UGC given the audience focus of talk radio. Integrating radio and digital expands distribution to the point CBS can justify hiring additional journalists in local markets – possibly beat reporters or the equivalent of columnists. See where I’m going here.

Almost every media discussion comes down to newspapers. Local sports writers have loyal followings. A player specializing in another medium is going to capitalize on that following at some point. It’s already happened in a few markets, but ESPN or CBS are best positioned to go after them, though I still think the major RSNs are asleep at the wheel for not locking them up, or at least doing a distribution deal with their newspapers to get content and more importantly hold the talent on retainer. That said, a CBS can either hire away beat reporters, then use them for exclusive radio beat reporting, online coverage, and short-form video packaged for online. At the least, they can strike a deal with newspapers to syndicate articles and get exclusive use of the talent for radio coverage and multimedia content. And once CBS and ESPN get rolling online, everything can be packaged for iTunes, mobile, video syndication, social media, and the myriad of other possibilities.

Don’t sleep on CBS. They have given no indication of taking this route, but you don’t have to look too hard to see that it exists. A successful push by CBS and ESPN could be another nail in the coffin for newspapers.

[Aside: this doesn’t even mention the power CBS can leverage through its broadcast channel]

Fantasy Buck Stops Hear

CDM’s court victory over MLBAM opened the door, now fantasy game properties plan to stand up to the leagues high costs. First up, CBS Interactive, who sued the NFLPA over what’s described as an inexorbitant price hike. CBS claims the NFLPA threatened to take away all fantasy rights if CBS took any action against the assocation, a bold assertion.

Fantasy sports is at a crossroads. One more lawsuit in favor of fantasy properties will give media control over information, devaluing intellectual property rights. It would deregulate the use of names and statistics for public consumption, allowing fantasy sports to operate untethered. At that point, could leagues even continue to charge media companies license fees for fantasy games, or will it become free?

CBS Interactive’s spat with the NFLPA marks the second fantasy sports controversy in as many months for CBS after it stirred the NCAA by using college player names in a fantasy game for the first time. CBS is third in the battle for fantasy supremacy, behind Yahoo and ESPN. Though the lawsuit against the NFLPA has less to do with differentiating its product, CBS wants the fantasy spotlight. They are interested in grabbing a bigger piece of a growing pie.

Fantasy users are extremely loyal, and slight product variations differentiate the companies. CBS may grab a few headlines from the NFLPA lawsuit, but few if any market share. Being ahead of the field in the college fantasy game will help grab new users, then its up to CBS to keep those users with their fantasy product. If they deliver, users will be more likely to use CBS for other fantasy sports, mainly fantasy football.

While a national fantasy trade association exists, it does not act as a consortium of fantasy games providers. As fantasy grows into big business, perhaps the major fantasy providers should form a single entity to  negotiate with leagues and handle these lawsuits. There is power in numbers. If companies come together, only for purposes of dealing with license fees and any regulations or lawsuits that arise, media companies have a better chance to reach a favorable, final industry-wide agreement.

While competition is fierce between fantasy game providers, the license fee battle will not be a differentiator, the game design and content will. Joining forces will bring this general dispute – not just the NFLPA, but all leagues – to an end, and likely in favor of the media companies.

CBS can’t be the only one dealing with exorbitant costs. The industry needs resolution, needs to draw the line for what is fair game and what’s not. What’s considered intellectual property, thus requiring licensing may become another differentiator between providers, if some decide to purchase the additional licenses. But that’s down the road, the leagues, media companies, and courts need to draw the line in the sand.