Sports betting media unicorns
Opinion piece on operators and their quest to strategically improve UA & retention...
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A while back, I put out a piece that profiled the growth of sports betting since the PASPA repeal in 2018. A key topic that I touched upon within the article was the customer land grab dynamic that resulted from the acceleration of legalization. Operators are scrambling to acquire new bettors, making customer acquisition expensive and inefficient at scale. This issue drives one of my core theses within the space:
What startups or companies can operators strategically acquire or partner with to optimize UA and UX?
Operators are searching far and wide for media unicorns that can emulate the success of the Penn + Barstool deal. In this context, media unicorns are synergistic, differentiating experiences that enable operators to acquire AND retain customers at a significant competitive advantage.
Historically, operators have relied on partner content such as short/long-form, radio and linear TV, coupled with flashy "$1,000 sign-up bonuses", to shepherd new bettors into their funnel. However, parity persists across these offerings. Don't believe me? Go check out some affiliate sites. They'll all have some version of a "Betting 101", "Sportsbook Review & Ratings" and "Daily Game Coverage" articles. More progressive outlets will throw in podcasts and VoD. Don't get me wrong - I'm not saying that these approaches aren't successful in acquiring new customers. However, the key to achieving market leadership is by finding media assets whose content experience can provide value over the entire customer lifecycle rather than just the initial conversion. The FanDuels, DraftKings and BetMGMs of the world are more than happy to endure lower profitability for a couple years in order to win the land grab phase while smaller operators drop out of the mix. After that period, the focus will shift to product innovation that drives loyalty and higher retention.
So how effective was the Barstool deal?
I consider the mother of all case studies (so far) to be the analysis of the first 10 days of legalized mobile sports betting in Michigan. This was really the first time that Barstool launched concurrently with competitors in a state.
The main takeaway: Operators (ex-Barstool) paid ~170% of GGR in promotional bonuses to acquire customers in the post-launch land grab. Barstool paid meaningfully less (~50%) because they have a differentiated media play that decreases their reliance on sign-up bonuses to get users into their funnel. They have culture! Wait, what does that even mean? I'm not really sure how I would go about describing culture, but distilled down to its most basic form, they have distinct media personalities who generate a new voice that sports betting media consumers aren't used to - and it excites them. Additionally, Barstool has significant brand loyalty and penetration within the Millennial and Gen Z demographic.
It's too early to tell how the Barstool experience will affect retention and the product innovation phase. Their ability to engage users over the long-term is definitely a risk because we all know that culture-based phenomena fall as quickly as they once rose. However, their exec team has proven an uncanny ability to stay close to what's "trending".
In an alternate innovation play focused on offerings, FanDuel partnered with in-play & micro betting odds provider Simplebet to power its NBA InPlay free-to-play product. While the free-to-play nature of the product naturally positions it for customer acquisition, analyzing user behavior will provide rich data to help transition the experience to a real-money play down the road. Simplebet calls it a bet on the future state of betting as in-play markets comprise 75% of handle in regulated mature markets like the UK1.
Here are a few other recent partnerships that further speak to the media unicorn hunt:
FanDuel + WAVE.tv (I love this one for so many reasons)
FuboTV + Vigtory (reverse approach!)
https://usbettingreport.com/interviews/simplebet/