Betting is the next battleground in sports streaming

Betting is the next battleground in sports streaming

With more cord-cutting options to choose from than ever before, sports fans have a veritable cornucopia of live services from which to pick. And as those services come up with new ways to win over viewers and keep them tuned in, some appear to be coalescing around a big new feature: betting.

Streaming services across the industry have started to add betting features alongside their sports feeds, offering a way to increase engagement and open a new revenue stream in the process. Disney, DAZN, FuboTV, Sling, and others have either launched betting companion features or have expressed an interest in entering the space in the US — and why wouldn’t they? Any savvy sports service would recognize betting has been synonymous with matches for as long as anyone can remember. And there’s plenty of money to be made.

“Sports fans have been unofficially making bets with their friends and family as they watch the game for decades,” Mike Berkley, chief product officer of FuboTV — which recently launched its own betting app — tells The Verge. “It’s kind of core to being a fan, making casual bets with friends and family, and it is something that we felt would make our product even more engaging than it is now.”

Look no further than streaming mastermind Disney — a typically family-friendly content purveyor — as evidence that betting could be the next streaming battleground for any company that owns a live sports service. During the company’s most recent earnings call, Disney boss Bob Chapek told shareholders that the company was “moving towards a greater presence in online sports betting” for its ESPN audiences, further stating that betting is something Disney is “keenly interested in and are pursuing aggressively.”

“We do believe that sports betting is a very significant opportunity for the company,” Chapek said. “And as we follow the consumer, we necessarily have to seriously consider getting into gambling in a bigger and bigger way. And ESPN is a perfect platform for this.”

(Disney was reported by Puck in October to be exploring a possible spinoff of ESPN, though a source who spoke with CNBC refuted the claim and said the company was focused on building value for ESPN Plus, including by exploring sports betting.)

Sports betting has been growing in the last few years on a state-by-state basis. In May 2018, the Supreme Court threw out a federal law that barred sports gambling, paving the way for individual states to permit it. (New Jersey, for example, legalized sports betting almost immediately.) Today, some 34 percent of sports fans bet weekly on games in the US, according to data firm Ampere Analysis, and spend an average of $51 a week. Sports enthusiasts are also spending around 3.2 hours a week on fantasy gaming, the firm’s data shows. That spells a pretty big opportunity for live sports services hoping to keep their users engaged, differentiate their products, and expand their business.

“The projection is that [legalization of betting] is going to continue to grow state by state aggressively over the next couple of years,” Berkley says. “There’s definitely a trend for this becoming not just legal but more mainstream.”

Disney is hardly the only company exploring the betting avenue. Dish partnered with DraftKings earlier this year to bake DraftKings’ Sportsbook and fantasy contests into its Dish TV Hopper platform as an app integration. (Dish-owned live TV service Sling supports an integrated DraftKings experience for betting, too, as well as dedicated betting information channels.) FuboTV launched its own proprietary sportsbook feature for betting in Iowa last month, and it’s currently in the process of clearing regulatory hurdles to operate in other states. NBC Sports and Peacock partner with PointsBet for their betting integrations.

Sports streaming service DAZN, meanwhile, plans “to be in the betting market directly where we can,” according to its chairman Kevin Mayer. DAZN spokesperson Graham James tells The Verge that with respect to its US betting strategy, DAZN has “no specific plans to share at this time but believe that the addition of recreational betting to the DAZN platform across all our markets will create a safe, fun, and immersive experience for fans to enjoy alongside the top-tier sports they love.”

“The fact that ESPN, DAZN, all these people are talking about it so publicly, it does make me think that they think it’s too big of an opportunity to let them pass by,” Ampere principal analyst Minal Modha tells The Verge.

While sports betting has traditionally been viewed as taboo in some circles, these companies are betting that the public’s view has changed in recent years. Chapek himself acknowledged that the move might have once been risky for a squeaky-clean brand image like Disney. But now, he says, betting would actually strengthen its sports arm, particularly among younger audiences.

“Gambling does not have the cachet now that it had, say, 10 or 20 years ago,” Chapek said last month. “It actually strengthens the brand of ESPN, when you have a betting component, and it has no impact on the Disney brand.”

Betting can work in one of several ways. Dish supports betting through a DraftKings integration on its Hopper devices, letting users scan a QR code to jump to DraftKings’ platform. Sling, meanwhile, uses a text-based redirect system that can be initiated from a menu icon within its experience. Fubo’s betting feature works with its own proprietary sportsbook app integration that syncs with whatever’s happening on your TV screen (though it’s still a two-screen experience, with the event happening on your TV and the betting happening through the app).

At present, Chapek says Disney plans to work with third parties on its betting offering. That makes a lot of sense for any company that wants to avoid investments of hundreds of millions of dollars to reach a level of scale akin to DraftKings as a betting operator, Jeff Ifrah, founding member of Ifrah PLLC, tells The Verge. Instead, these streamers can opt to partner with third parties to make money through affiliate gaming revenue.

“The question to a company like Disney or other streaming companies is going to be: Is that really the best way for us to monetize?” Ifrah says. “There are a ton of practical questions as to what’s the best way to monetize this opportunity. It may not be to be an operator.”

There are plenty of sportsbook apps currently available: DraftKings, FanDuel, and BetMGM are just three among many. But sports betting through these platforms isn’t available in all 50 states. For example, DraftKings’ mobile and online betting system is supported in 16 states at present. Importantly, Ifrah points out that any company hoping to clear the regulatory hurdles to operate a proprietary betting platform will have to do so state by state.

For a company like FuboTV, that means scaling the product is going to be a slow-moving process — and an expensive one. Currently, its sportsbook app is only available in Iowa, but Berkley tells me FuboTV has market access in four other states, meaning it has obtained licenses to operate in those states but still has to complete the regulatory approval process.

But in a sea of services that are all more or less offering the same thing (less if you’re looking for regional coverage, which is a whole other mess entirely), Modha says betting could be a point of differentiation that may help a sports streamer to stay afloat.

“I think so many of the streaming services will be thinking about, ‘How do we hit that [unique selling point]? How can we ensure that as more and more streaming services are available and the market becomes more fragmented and people are having to spend more and more money, how do we make sure we’re not one of the disposable ones?’ And that’s why something like the gamification of betting comes into it,” Modha says.

If and when sports betting does become more commonplace across streaming services, it’ll offer streaming companies yet another distinguishing feature that could potentially allow their sports services to succeed. It’s a gamble much like Netflix’s gaming push — the more points of engagement, the better. But as with any streaming draw, the success of these betting implementations will largely depend on whether they can stick out in a crowd of similar or existing offerings, particularly up against goliaths like Disney.

“There are so many different services in the US. So in the initial stages, all of this will be all shiny and new, and it will attract audiences,” Modha says. “But that will be an evolution — the product will have to continuously evolve to make sure that those audiences stay engaged and make sure that you stay ahead of the curve of where everybody else is.”

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