Technology spurs growth of fantasy sports

CHICAGO Thu Sep 25, 2008 4:16am EDT

Indianapolis Colts running back Joseph Addai (29) eludes Tennessee Titans defensive back Cortland Finnegan during first quarter play in Indianapolis, December 30, 2007. REUTERS/Brent Smith

Indianapolis Colts running back Joseph Addai (29) eludes Tennessee Titans defensive back Cortland Finnegan during first quarter play in Indianapolis, December 30, 2007.

Credit: Reuters/Brent Smith

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CHICAGO (Reuters) - If Scott Troetel is out with friends when the Indianapolis Colts are playing, he often reaches for his Blackberry to check how running back Joseph Addai is doing.

But Troetel, who is 32 and lives in Boulder, Colorado, is not particularly interested in the Colts. Addai's performance is crucial to "Addai in the Life," Troetel's fantasy football team.

Fantasy sports, where fans select real athletes for make-believe teams, are exploding onto new platforms like smart phones and social networking sites, grabbing the attention of advertisers, wireless carriers and software companies.

And with a growing number of people playing casual games on the Internet and a largely untapped market outside the United States, analysts say the market for fantasy sports can only grow.

Among companies benefiting from this growth is 4Info, which alerts its users to things like sports scores and celebrity gossip via text message, with its revenue coming from advertisers.

Of the half a billion text messages that 4Info expects to send this year, as many as 15 percent will be to people seeking sports results to feed into their fantasy sports teams, said CEO Zaw Thet.

"People have yet to realize the full potential of fantasy as it really comes to the cell phone and we'll see that over the course of the next several years," said Thet, whose company is backed by Gannett Co, General Electric Co's NBC Universal and venture capital firms.

While there is disagreement on the origin of fantasy sports, they came to wide attention with the publication of "Rotisserie League Baseball" in 1984, based on a league played by a group of New York media types and rules by magazine writer Daniel Okrent.

The appeal of fantasy leagues to sports fanatics is often cited as a factor in the early success of USA Today, which was launched in 1982 with more detailed baseball statistics than other newspapers.

"It's like you've combined the old macho notion of knowing more than anybody about sports with Dungeons and Dragons," said Robert Thompson, professor of pop culture at Syracuse University. "It turns out that's a pretty good marriage."

Troetel, for example, checks on his players at least two or three times a week, using his handheld device to go to the relevant websites. "The way I know sports now is far and away greater than if I didn't play fantasy sports," he said.

INTERNET BOOST

Fantasy sports took an exponential leap in the late 1990s as the Internet made sports results more widely available and sites like Yahoo Inc began to host fantasy sports leagues for a fee.

There are now more than 27 million players in the United States and annual revenue is in the range of $800 million to $1 billion, according to the Fantasy Sports Trade Association.

Fans already use their mobile phones to read sports news, review game scores and check on their teams. Wireless carriers are now working to align themselves exclusively with whatever sports properties they can as a way to make themselves more attractive to consumers.

"If you're the only one who offers what people want, they're going to find a way to switch to your service," said Steve Gaffney, director of sports and entertainment marketing for Sprint Nextel Corp, which has deals with the National Football League and the National Association for Stock Car Auto Racing (NASCAR).

While small screens are not that attractive to advertisers, smart phones like Research in Motion's Blackberry and Apple's iPhone that offer live streaming video and other multimedia features is undeniable, said Bob Bowman, chief executive of Major League Baseball's advanced media unit.

Another growth area is social networking sites like Facebook, which is hosting a fantasy football game with 350,000 users since it started in July, making it one of the larger fantasy football games on the Internet.

"Fantasy sports at its core is a set of microcommunities of your good friends that you want to stay in touch with and 'talk smack' to, and Facebook allows people to do that," said Jeff Ma, co-founder of Citizen Sports Network, which runs the Facebook game in partnership with Time Warner's Sports Illustrated.

Ma, whose San Francisco-based firm is backed by venture capitalists Kleiner Perkins Caufield & Byers, is the basis for the main character in the book "Bringing Down the House" and the movie "21," in which a group of students used math to win millions of dollars from casinos.

Another big growth area for fantasy sports is among so-called casual gamers, those whose interest is limited or who may not have a lot of free time to play.

ESPN, a unit of Walt Disney Co, in late August introduced a game where users try to select winners and top performers in an effort to be first to build a 25-pick winning streak over four months that would net a $1 million prize.

"It's our strategy to develop games that are very easy to play," said Raphael Poplock, vice president of games for ESPN Digital Media.

These casual players could help almost double the number of fantasy sports players to 50 million over the next five years, said Chris Russo, CEO of Fantasy Sports Ventures, a media company focused on fantasy sports.

FANTASY CRICKET?

Other companies taking advantage of the growth in fantasy sports include Google's YouTube, Electronic Arts and advertisers like Gillette and Coke.

"The sheer participation numbers are so overwhelming," said Andrew Bangs, a community marketing specialist with YouTube, which launched a fantasy football channel in July.

The growth in fantasy sports is also feeding back into the real sports leagues, where fantasy sports fans spend more time engaged with real teams than fans who don't play fantasy sports.

"Nearly 60 percent of revenue comes from fans attending games, so to the extent I can get a casual fan to go to one game that means a lot," baseball's Bowman said. "If I can repeat that 10 million times, that's real money."

Overseas markets offer another enticing opportunity, as games around cricket, soccer, rugby and other sports are not as developed as those in the United States, said Steve Byrd, executive vice president with Stats Inc, which licenses sports content and statistics for almost 90 different sports leagues.

"You get the growing middle class in China and India, with Internet access, they're going to want to engage with their sports the way that we do," he said.

In addition, industry executives said the number of fantasy websites is exploding. That expansion will only speed up since the U.S. Supreme Court in June declined to hear the appeal by Major League Baseball of a lower-court ruling that any company has the free-speech right to use the names and performance statistics of famous athletes.

Of course with so many companies out there, there is bound to be a shakeout.

"One out of every 10 sites makes it," said Rick Wolf, chairman of the Fantasy Sports Association. "For the small companies, it's very hard to succeed."

Not everyone is in favor of fantasy sports.

"I am the flat-earth society on this one," said Dave Zirin, sports writer for The Nation, a left-wing magazine. "It's a very atomizing experience to live in the United States at times and so sports is one of those few ways where we're able to get a sense of collective joy. Fantasy sports runs counter to that."

Allison Lodish just wants her husband back. She launched Women Against Fantasy Sports (womenagainstfantasysports.com) in August as a forum for frustrated spouses. The site's top-selling item is women's underwear with the slogan: "Closed for the fantasy season."

(Reporting by Ben Klayman; Editing by Eddie Evans)

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