While researching this story idea, we did a little informal poll in office to check how many people had sampled homegrown fantasy gaming platform Dream11, and were surprised to find out that our most critical employee - the 20-something pantry boy - is a regular player, the kind that knows hacks and such. In India, you know you've arrived when you penetrate the population. And when there are stats to prove it: The Dream11 team claims that the platform has over 45 million users. In an 'Android country' like India, for an app to reach this count despite its absence on the Google Play Store is incredible.
Dream11, the brainchild of fantasy gamers, football fans and childhood buddies Harsh Jain (33, chief executive officer and co-founder) and Bhavit Sheth (33, chief operating officer and co-founder), was launched a decade back and is headquartered in Mumbai. Dream11 employs around 185 people. Both Jain and Sheth have a background in engineering and business administration. Jain was marketing manager at Jai Corp (steel, plastic manufacturing company); Sheth was a financial research intern at an IT company, before founding Dream11.
Here's how it works: Fantasy games are run on digital platforms that allow sports fans to, virtually, create and 'own' a team, prior to an actual match, and make monetary bets in that match/season. These virtual players earn points basis the actual on-field performance of the real players. The total points earned determine the overall ranking of one's virtual team, and, consequently, the return on one's money. Some platforms also allow free participation.
A popular phenomenon in the West, it is relatively new in India. The idea of fantasy gaming is old and pre-dates the internet. As the official website of the US-based FSTA (Fantasy Sports Trade Association) puts it: 'The concept of picking players and running a contest based on their year-to-date stats has been around since shortly after World War II (1939-1945)'. Over years, this format has come to include several sports, including golf and hockey. Fantasy gaming is particularly popular in the USA, Australia, EU, Japan, and now India.
Dream11 offers fantasy games in modes of cricket, football, basketball and hockey. Among the platform's investors are names like Kalaari Capital, Think Investments, Multiples Equity and Tencent. As per information available on business information website Crunchbase, the company has raised $100 million in a Series D funding round led by Chinese investor Tencent in September this year. Reports say that the company has been valued upwards of half a billion dollar.
At a recent IFSG (Indian Federation of Sports Gaming) event in Mumbai, we caught up with Dream11's CEO Harsh Jain and his recently appointed chief marketing officer Vikrant Mudaliar, to better understand the challenges that come with this fascinating territory. The fantasy gaming segment in India comprises around 70 players. Some prominent names include Fantain, BalleBaazi.com, FanMojo, Jiyo11 and Spartans11.
"I had already tried my hand at fantasy football and was looking for options for cricket in India. It didn't exist, so I decided to start it," says Jain, talking about the inception. The most feasible 'partner options' for the project were friends and family. "I have known Bhavit since I was seven. He opted in while I was asking around and that's how I got a partner to start out with," he recalls.
There was one hard failure before they found success. Incorporated in 2008 and launched a year later, Dream11 was, in its early avatar, an ad-based platform, that included facets like a social cricket community, chat options, discussion forums/blogs and free-to-play, season-long fantasy gaming.
However, the ad-based, free-to-play, season-long game format soon ran into a hurdle as the seasons stretched on for too long. Around 2010-11, the team realised the format wasn't working. The platform was then re-launched in 2012 as 'freemium fantasy sports for single matches'. By then the team was down to 10 people. Freemium, especially in the online world, is when basic services are provided free of cost while more advanced/premium features are paid for.
In Jain's experience, the typical app user today needs instant gratification, runs low on commitment and has a short attention span. "Season-long gaming required management of a virtual team for months. The consumer side wasn't working... and since we didn't have users, advertisers didn't come," he says.
The platform then moved from an advertising model to a pay model, which means, the new Dream11 would earn directly from the users. Today, about 85 per cent of the platform's total user base plays for free and the average investment made by paying players is '25. While the bets go as low as '11 (small bets help retain users), they also soar as high as several thousands of rupees. The combined prize pot of all winnings can amount to over a crore. However, the values vary from match to match and sport to sport.
After the initial capital ("single digit crores on the higher side" is all we could get Jain to reveal) ran out between 2009-12, the duo reallocated 40 out of their 50 employees and launched a social media agency in mid-2010, Red Digital, to stay afloat: "I didn't want to go back to my family for more money." The digital shop did well - "we learned how to make some money" - and the duo put their earnings back into the fantasy gaming platform, which was "finally fit for the market". In mid-2013, Red Digital was acquired by Gozoop, a Mumbai-based digital agency. Jain's "biggest, 24 by 7, unpaid advisor" is none other than his businessman father Anand Jain, who is chairman of the aforementioned Jai Corp and also happens to be a close friend of business tycoon Mukesh Ambani.
The next challenge was - how to scale? "And for that we needed real money," Jain says. Though they had already broken even, the duo spent the next three years pitching to venture capitalists; after 150 pitches, they finally found their first investor and went on to raise funds in three rounds, over the years. Their user base grew from three lakh in 2014 to 17 million in 2017 (as claimed). According to data with the Registrar of Companies, the company hit revenue of '61 crore from operations in 2016-17, the last year for which figures are available. Interestingly, nearly half the present day team of 185 was hired in the last year.
Jain tells us that Dream11, "like, say, WhatsApp," has little offline cost such as sales, B2B, inventory, logistics, etc. "There is a small team that's managing a platform, which is the product," he says, adding, "This product is being managed and sold and bought and the circle ends there. We want to achieve what platforms like Flipkart and Ola are achieving but at one-tenth the manpower..."
Around 2014, the company tried entering the US and Australia markets, but had to "suspend" operations in 2016. "The idea was to experiment," says Jain, "We realised that those initiatives were generating only one per cent revenue for 10-20 per cent more work. We didn't see ourselves as formidable competition against existing local players (Draftkings, Fantasy Football, Fantasy Premier League)..."
While Dream11 has cricket, kabaddi, NBA (basketball), football and hockey options, the largest chunk of users (85 per cent) 'play' cricket on the platform. Three years back the share of cricket on the platform was 95 per cent. "We hope it comes down to 75 per cent in the coming years," he says.
THE GROWTH FACTOR
According to the FSTA (Fantasy Sports Trade Association), the US-Canada market is mostly dominated by soccer, baseball, ice hockey, college football, racing and basketball. The fantasy gaming user base in the US-Canada market has grown from 500,000 in 1988 to 59.3 million in 2017.
As per a March 2018 report by the IFSG and AC Nielsen, 89 per cent of the people who sample fantasy sports once, continue playing. Most users are young (18-35 years), independent individuals with high disposable incomes, from metros and non-metros alike.
Commenting on the potential for growth, Jain says, "The pie of sports lovers in India is big enough for several (fantasy gaming) companies to be successful. Our focus is on creating on a locally-adapted product. India is different market and cut-copy-paste won't work. For now, we want more entities to come into the industry..."
Jain's goal: to touch 200 million users in the next two years. "But growth is easier at a smaller level, he concedes, adding: "Our product must increase the engagement level..."
Besides improving the product, growing the category and working towards establishing "standardised best practices" in the app-based gaming space, team Dream11 has other aspects to keep it busy. Recently, one of the roadblocks Jain and partner faced was legal in nature. A Chandigarh resident approached the Punjab and Haryana high court claiming that he had been a victim of gambling on Dream11. In April this year, the court ruled that such games can't be considered gambling as they required skill, judgement and discretion. The matter had also escalated to the Supreme Court of India. A challenge to this judgement was also dismissed by the Supreme Court of India.
ALSO READ: Vikrant Mudaliar is Dream11's new CMO
Dream11 brought Mudaliar on board as CMO in February this year. Mudaliar, a former Yatra.com hand, has over 17 years of work experience, during which time he has worked at companies like Tata Sky, Lenskart, General Motors and Pepsi Foods, among others.
Mudaliar, in-charge of brand building for Dream11, has his own challenges. "We will soon face a situation where the early adopters of the platform - ones who have a natural affinity to fantasy sports - have already become our regular users. Converting the next 50 million sports fans into fantasy sports gamers, is the big challenge. They will need to be educated." Active fantasy gamers' consumption of sports on media channels is, as expected, very high.
The official Dream11 app is unavailable on Google's Play Store due to Google's policies on daily fantasy sports (DFS) apps. While the iOS version can be downloaded from the Apple App Store, the android app has to be downloaded off the Dream11 website. Despite that, the Google Play Store already has 250+ unofficial fan-created apps. There are thousands of advisory videos on YouTube too. These unofficial platforms give users gaming tips and largely rely on ads for income.
The beta version of the brand's official fan engagement arm Sports Guru was launched earlier this year.
"We are aware of this (referring to the fan-based content) and are happy about it. There is an entire ecosystem out there, and in fact, we have received images of billboards about actual tuition classes on Dream11. This proves our point that it's a game of skill. No one's ever heard of 'lottery coaching classes', right?" Jain asks rhetorically, referencing the image-damaging argument that platforms like his, mirror the gambling world. "Khelo Dimaag Se" says MS Dhoni in Dream11's TVCs (created by Leo Burnett Orchard) - to reiterate that this is a game of skill, not just chance. "It's like championing the cause of fantasy sports... making it more mainstream. Dhoni, and advertising on IPL, did that. Our current marketing investments are aimed primarily at driving growth," Mudaliar says.
In gambling, the tendency to chase one's losses is what makes people spend beyond their means. Mudaliar insists that his users don't stick to the platform because of the money they win, but because they love sports. "There is no point being on the platform if the user is not ready to delve into sports and go through the uphill task of analysing it," he says. He is open to tools like referral bonuses and incentives, to keep the user hooked.
Mudaliar's marketing challenges include: driving acquisitions, market share and growth. For a category leader, that sometimes comes down to "evangelical marketing" or helping build positive word of mouth around the fantasy sports industry at large.
After partnering with the International Council of Cricket (ICC), Dream11 also signed up with Pro Kabaddi League (PKL), Indian Super League (ISL) for football, Fédération Internationale de Hockey (FIH) and the Australian Big Bash League (BBL) for cricket. In case of the NBA, Dream11 is the official fantasy game partner for India only. "League partners understand that Dream11 is not just another sponsor which is out just to put its logo..." Mudaliar says, "The more they play on our platform, the more they will watch the game. It's a symbiotic relationship that drives marketing for our partners as well."
Dream11 has worked with Ogilvy (digital ads with cricket commentator Harsha Bhogle) and Happy mcgarrybowen (re-branding exercise) in the past. "We believe agencies have a certain core expertise. They'd like us to believe they are equally good at a number of tasks, of course," smiles Mudaliar.
Being a digital-first brand, the bulk of Dream11's advertising began on digital channels like Facebook, Cricbuzz and Hotstar. Now, TV is a significant part of the media mix, for example, during the IPL this year. Besides Dhoni, we've also spotted cricketer Shikhar Dhawan's face on Dream11's digital posters. While endorsements are cricket-centric for now, and will continue to be in the near future (with good reason; Dhoni's presence helped take the user base from 20 to 45 million in a matter of nine months), Mudaliar hopes to explore associations with non-cricket sportspersons in the long run.
At the category level, the biggest challenge on the business-facing side is establishing a self-regulating uniform code of conduct for all brands, and, on the consumer-facing side, converting passive sports fans into active fantasy sports users. "Passive" sports fans might not be aware of or interested in fantasy games. Mudaliar's job includes giving them a reason or "trigger" to not just watch but participate.
A Note From the Editor
Before starting to write this editorial, I went onto YouTube to check out some ads for Dream11. After watching a few edits of the famous Dhoni advert ("Khelo Dimaag Se"), I allowed YouTube to throw up some more content around the sports gaming platform... and was surprised to find detailed videos and tutorials - a lot of them are in Hindi, by the way - explaining how it works. In the online world, you know something's big when it's a verb (Google it, Uber it, WhatsApp it), or when there are videos -and other kinds of ancillary content- that deconstruct the core product. (Or when your office tea boy tells you how it works and offers to lend you some hacks).
So, here's how Dream11 explains itself on its website: 'It is a Game of Skill that offers Indian sports fans a platform to showcase their sports knowledge. Fans can create their own team made up of real-life players from upcoming matches, score points based on their on-field performance and compete with other fans.'
Notice how the team keeps reiterating that it's a game of skill, every chance it gets. Fact is, one bets real money on the 'real life' performance of actual sportspersons. The brand has been dealing with the 'G' word and has faced its share of flak in this regard. But that's not what our story is about.
We spoke to Harsh Jain, one of the two co-founders of Dream11, about the early days (he launched it with his childhood buddy Bhavit Sheth), the incredible success of this digital and tech-led product (45 million users) and the path ahead (growing the category). We also spoke to the brand's marketing head Vikrant Mudaliar about his set of challenges. The biggest one being - once the existing pool of fantasy sports enthusiasts are on the app, how on earth does one go about converting regular sports 'watchers' ("passive" fans) into fantasy players?ASHWINI GANGAL
This article was first published in our magazine afaqs!Reporter on December 16, 2018.
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