Fantasy sports. Last week, I wrote about the overwhelming popularity of the genre, and the stats are staggering. Spending on fantasy football doubled between 2008 and 2012 and now totals $1.6 billion per year. There are 26 million users in this niche alone, up from just 2 million at the turn of the century, according to the FSTA. Including all fantasy sports, most estimates place the size of this market at 33 million people.
The industry contains a few major companies, including ESPN's majority owner Disney (NYSE:DIS), Yahoo (NASDAQ:YHOO) and CBS (NYSE:CBS), in addition to league-owned competitors, like the NFL's fantasy football game. Newer sites like FanDuel and DraftStreet are also in the mix, offering users a hybrid of fantasy and traditional sports betting.
The science of fantasy sports
Regardless of the format, the obvious question remains: Why are fantasy sports so popular?
Three academics have attempted to provide an answer. Published earlier this month, University of Michigan's Dae Hee Kwak and Joon Sung Lee, and Joseph E. Mahan III of Temple University published a study called "Ad-Evoked Illusory Judgments in Fantasy Sports Participation: Effects of Customization Level and Expert Information." No one ever said professors were great at crafting catchy titles.
In the paper, the trio tested the relationship between fantasy sports ads and participation. Generally speaking, the greater the level of control a user thinks he or she has, the more they want to play the game. This makes intuitive sense. If you're given the choice between a game of blackjack with a random dealer and opponents, and a game of blackjack where you can select your dealer and opponents, you'll almost always pick the latter. Even if your statistical odds of hitting 21 are identical in both scenarios, it will feel better to customize the game as much as possible.
And the same is true in fantasy sports. Kwak, Lee, and Mahan surveyed a group of expert fantasy players, and tracked their reactions to two advertisements. The first ad promised a high level of customization with the tag line "Build your ultimate lineup," while the other simply offered a "One-click lineup."
My intuition tells me to go with the first option, and yours probably does too.
To test this theory, the study asked a series of questions to gauge how each ad affected perception of control, winning expectancy, attitude toward the product, and willingness to participate. The following conclusions were drawn:
- The higher the illusion of control a user has, the more they expect to win their fantasy league.
- This higher level of win expectancy will, in turn, make users think more highly of the fantasy product.
- Both of these positive feelings will make users want to play the fantasy game more often.
The illusion of control
Let's use a real-world example. In the fantasy football universe, Disney's ESPN, Yahoo, CBS and the NFL each give users a variety of choices. Draft options include snake, auction, keeper, and dynasty, while scoring settings and roster sizes are also very flexible. When it comes to customization, all of the major fantasy football services are maxed out.
So what is another way these sites can increase users' illusion of control? By giving them mountains of research. Kwak, Lee, and Mahan's study alludes to the positive effect that expert opinions have on user feedback, and it makes sense. People like hearing what the brainiacs have to say.
Take ESPN for example. The media giant regularly features columns from well-known fantasy analysts, including Matthew Berry, Eric Karabell, and Christopher Harris. You've probably heard of these guys from SportsCenter or other ESPN broadcasts. Yahoo, on the other hand, has a staple of respected writers, including Brad Evans and Andy Behrens. NFL.com also has Michael Fabiano, while CBS has Jamey Eisenberg. All seven of these experts have at least 30,000 Twitter followers.
Fox (NASDAQ:FOX), on the other hand, doesn't have an expert pool that generates any notoriety like the rest of these sites. Furthermore, Fox fails to give fantasy users a mobile app, which is a mainstay of its peers mentioned above. Perhaps this is why the site is perennially listed as critics' least favorite fantasy site in comparison to the rest of the bunch.
Thus, it appears that the combination of notable analysts and customizable leagues is why ESPN and Yahoo dominate fantasy sports; both hold approximately 75% of the market. In football specifically, the NFL's site is on its way, but is far younger than these two, while CBS's experts generate less buzz than their peers.
This train won't stop
When Kwak, Lee, and Mahan talk about the illusion of control in fantasy sports, it's important to understand that the business's major players are doing everything they can to increase this. While statistical resources are available pretty much wherever you look, it's the experts that truly separate the best from the worst. To answer the question posed above, the industry's massive growth is driven by the sheer availability of customization options available.
Once users believe they have control of their fantasy league, they expect to win, and more importantly, they want to play more often. It's this chain of events that explains why fantasy sports are so popular. I don't expect the train to stop any time soon.
Fool contributor Jake Mann has no position in any stocks mentioned. The Motley Fool recommends Walt Disney and Yahoo!. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.