In the past decade, India has slowly emerged as a market for online fantasy sports operators because of its very high potential. For those who don’t know about fantasy sports, online fantasy sports are games where players select a virtual team of real players and compete with other players. The virtual team is made up of real-world players who are participating in a real-world match. The virtual team scores points based on the real-world statistical performance of the players in the match. The player whose team scores the highest points wins the contest.
India’s high potential is a result of the digital revolution that took place almost a decade ago. The years between 2010 and 2020 saw a huge surge in the number of smartphone and internet users. In 2019, India had over 500 million smartphone users as reported by techARC. In 2020, Kantar reported that close to 639 million people had access to the internet in India. While the digital capability certainly helped, there is a prominent reason as to why online fantasy sports became such a big fad in India.
India and its obsession with the game of cricket is no secret. It is the sole reason why fantasy sports and the fantasy cricket game in particular became so popular in the country. For context, the last edition of the IPL saw an average of 31.57 million impressions as reported by BARC. The Indian user has always craved for a deeper engagement with their favorite sport and fantasy cricket has been the perfect solution. Once OFS (online fantasy sports) platforms penetrated the Indian market by pitching fantasy cricket, they saw an even bigger opportunity. The platforms started hosting contests for other sports as well. The new generation of India started developing an interest in sports like football and kabaddi because of fantasy sports, which is evident from the report shared by FIFS that states that 59% of fantasy sports players started watching new sports because of their interest in fantasy sports.
The growing interest in fantasy sports has led to fantastic year-on-year growth in revenue for the OFS industry. It was reported by KPMG that the OFS industry had gross revenue of INR 920 crore in FY2019, which rose to INR 2400 crore in FY2020. The OFS industry is also giving the Indian government a reason to smile as they paid a GST of close to INR 445 crore, which should result in continued support from the government.
The future looks very bright for the OFS industry as it is reported by KPMG to be growing at a CAGR of 32%. This growth beats the growth rate of the overall online gaming industry, which is expected to grow at a CAGR of 22%. By the end of 2024, the OFS industry is expected to be worth around INR 2378 crores. This potential has been well recognized by investors as FIFS reported investments of INR 1500 crores back in 2018-19.
The fantasy sports industry has multiple avenues and drivers of revenue generation that are attracting the interest of potential investors even now. Some of them are as follows:
- Partnerships with League/Player: In recent years, sports players, leagues and OFS platforms have had a strong relationship. The relationship helps OFS platforms generate huge interest in its audience which in turn generates higher revenue. The leagues and players also get better reach through OFS platforms. The relationship is mutually beneficial and brings in high revenue for OFS platforms. Recently popular fantasy cricket app Howzat announced its partnership with cricket legend Yuvraj Singh, which got Howzat some much-needed traction before the start of the new IPL season.
- Advertising: KPMG reported that 53% of the fantasy sports players open their favorite fantasy apps more than once a week. This means that advertisers have a dedicated audience interested in sports and engaged on a platform for a prolonged period. Multiple brands have cashed in on this opportunity by using OFS platforms to advertise their product and service.
- Cash Contests: Online fantasy sports are real money games where the user has to pay an entry fee to join a cash contest. While the major portion of the entry fee goes to the prize pool, a small portion of it is charged as a service fee by the OFS operator. The more popular the platform, the more power it has to charge a higher service fee, which in turn generates higher revenue.
There is no doubt that fantasy sports platforms have cracked the code to generate higher revenues year on year. Therefore, it should not come as a surprise when potential investors start investing more and more money into OFS platforms in the coming years.