As per a report by KPMG, the fantasy industry clocked contest entry amount (CEA) of over Rs 6,000 crore in FY19, which more than doubled to about Rs 16,500 crore in FY20
The sunrise sector of the online gaming industry — fantasy sports — hit a speed bump during the pandemic. Owing to the cancellations of almost all live sporting events in these times, fantasy sports apps have seen a steep drop in user engagement and user base growth since March 2020.
The category saw a glimmer of hope when live sporting events commenced in May with European football league Bundesliga. However, months of inactivity, especially in a cricket-obsessed country like India, has resulted in a temporary setback for Indian pure-play fantasy gaming app providers.
The nearly 140 fantasy sports operators in India are now eagerly waiting for Indian Premier League to kick off in the UAE on September 19 to revive their businesses.
All about cricket
The online fantasy sports (OFS) sector has been registering rapid growth for the last four years. The user base for fantasy sports increased from just 20 lakh in 2016 to nine crore in 2019. Operator revenue almost tripled from Rs 924 crore in 2018-2019 to Rs 2,470 crore in 2019-2020, according to a recent study by KPMG. The report also found that the industry clocked contest entry amount (CEA) of over Rs 6,000 crore in FY19, which more than doubled to about Rs 16,500 crore in FY20.
However, the drop in usage of these apps during the intense lockdown months was dramatic. According to Harikrishnan Pillai, co-founder and CEO, TheSmallBigIdea, “Indian fantasy sports platforms witnessed participation from about five million Indian sports fans between April and June 2020, which is a small percentage of the online fantasy gaming universe.”
Currently, close to 15-20% of active users on OFS platforms are paid users. OFS players hope that small ticket prices could attract users to take part in paid contests.
One of the main drawbacks for this sector in India is its dependence on cricket. In 2019, cricket dominated the sector with close to 85% share of the CEA. “Our industry interactions have indicated that Q1 of FY21 was adversely impacted with the IPL not being held. IPL constitutes 35-40% of the industry revenue,” informs Girish Menon, partner and head – media and entertainment, KPMG in India.
During the league-dormant period, a few OFS players dabbled into new sports as well as into long-tail leagues of sports like cricket. Menon says that some also expanded into skill-based contests, such as quizzing, to increase engagement; but they largely stayed away from casual gaming, which attracts the highest number of users. For instance, Dream11, the market leader, chose not to diversify to retain users.
KPMG estimates that platforms charge a fee of about 10-20% of the prize money depending on the sport portfolio. This fee reduces the total money won by players. To stimulate demand, Dream11 has reduced its fee for private contests from 15% to 5% till August 31.
Sudhanshu Gupta, COO, Paytm First Games, says, “Because of this prolonged lull, users may have uninstalled or moved away from fantasy sports.” As a result, companies that were into pure-play fantasy sports and lacked a diverse portfolio of games or those with smaller market share will have to invest in reacquiring users, analysts say.
This explains Dream11’s Rs 222 crore investment to be the title sponsor for IPL. While advertising on television during IPL will incur high costs, digital advertising is expected to be more affordable. User acquisition cost this year, Pillai says, could be as low as 30-50% of last year’s levels.
A slow revival has already begun with international cricket tournaments resuming. Mobile Premier League, for example, claims to have seen high participation in the recently concluded England vs West Indies and England vs Ireland series. “Fantasy football, too, is taking off with major football leagues restarting over the past two months,” says Abhishek Madhavan, VP, growth and marketing, Mobile Premier League.
Analysts say that there is pent-up demand for fantasy sports because of the long absence of live sports. “As most of the sporting events are expected to take place with either limited or no in-stadia audience, fantasy sports will play a pivotal role in driving fan engagement,” points out Amrit Mathur, strategic advisor, Federation of Indian Fantasy Sports.