They're called fantasy sports, but there's nothing imaginary about the bottom-line appeal that these online games hold for Web sites and online marketers that need to attract consumers.
Fantasy games give dedicated fans the opportunity to draft real-world stars and manage them through an imaginary season of play. Between 14 million and 30 million consumers are playing the games, up from an estimated 1 million in 1989. What's more, players are quickly moving their fantasies online.
The good news for Web sites and advertisers is that fantasy games are an incredibly "sticky" application. Once fans sign on, they're likely to stick around. Advertisers, who know that sports fans traditionally are loyal to sponsors, have ample time to deliver their messages to a targeted audience of largely male sports fans.
The ongoing advertising slump is hurting profitability of online games. But Web site operators say that some fantasy games already turn profits and that the overall category won't remain a loss leader.
"From the beginning, we've wanted to make these games great for the fans," said Jim McGee, vice president of consumer products for ESPN's Internet operations. "But we've also had an eye on turning a profit."
Web site operators believe that the rapidly evolving fantasy games sector can drive multiple revenue streams. Some sites are charging $29.95 or more for a season-long game. Operators also are signing advertisers to serve as official fantasy league sponsors. Die-hard fans indicate they'll pay extra for breaking sports news delivered to their PCs or wireless devices. And, as fantasy games evolve, business-to-business revenue is growing.
So far, however, there's no consensus on which business model will survive. CBS SportsLine.com surprised the industry last year when it dropped registration fees and sought corporate sponsors. In contrast, ESPN.com has stuck with its battle plan and continues to charge $29.95 for premium games for, say, a season of baseball or football.
It's clear that the arrival of such media heavyweights as ESPN.com, FoxSports.com, CBS SportsLine.com and Yahoo has reshaped a once-sleepy business that used to be the province of mom-and-pop operators.
"I don't have the media might that these new guys do," said Charlie Wieger, vice president of marketing for CDM Fantasy, a relatively large fantasy game operator that expects to report about $9 million in 2001 revenue. "I can't compete with an ESPN. They can drive so much traffic just by running a couple of little lines at the bottom of the TV screen."
