Degree of Fantasy Game Differentiation Diminishing

The fantasy game model is a game construct where contestants select individuals, sport teams, etc., to form a virtual "team," which is then tracked for certain performance characteristics or news items, which then get converted to a point system for scoring purposes. The contestants attempt to craft a team that can generate the highest score, for either bragging rights or prizes. The fantasy model, typically applied to sports like football and baseball, is expanding to other areas such as politics, soap operas and movies, in addition to expanding to other sports such as fishing. Although this expansion captures more participants, the games themselves operate similarly to traditional fantasy sport contests.

Traditional fantasy games differentiate across these dimensions:

• Stakes/Prizes (free to hundreds of thousands of dollars)
• Player selection (draft, salary cap, auction)
• Scoring methodology (statistics and weightings)
• Competition method (head-to-head, rotisserie, playoff)
• Timeframe (daily, monthly, season, post-season)

What passes now as new and innovative is usually no more than just a minor variant on one of the above dimensions. This is borne out by new research from the Fantasy Sports Trade Association, http://www.fsta.org/, that states that the number of fantasy sport consumers have only increased 7% from 2003-2007. This statistic is more weighted toward the pay-to-play fantasy consumer and is underweighting the free-play fantasy consumer, which is the majority of fantasy players. However, the fantasy consumers that play free games generally are less lucrative to the fantasy operator than those that pay entry fees.

For fantasy operators, particularly new entrants, that want to compete effectively in a relatively crowded and undifferentiated marketplace, game innovation that provides a sustainable competitve advantage is required. Even if the new entrant developed an innovative game concept that proved popular, competitors could easily copy the concept and bring it to market.

Yahoo, ESPN and CBS are the largest fantasy football sites, according to research from the Fantasy Sports Association, http://www.fantasysportsassociation.com/. Fantasy football, by a large margin, is the most popular of the fantasy sports. Each of these competitors has unique users/visitors in the 1.5M to 4.5M range. It would be very difficult for a new entrant, even if the first mover with a differentiated game, to prevail against larger competitors that decided to implement that game if there were no real barrier to entry.