Walt Disney is expanding further into the digital media market.
Bidness ETC reports that Disney is investing $250 million into DraftKings, an online fantasy sports website founded in 2011. The Massachusetts-based startup allows customers to use real money to participate in fantasy sports. DraftKings also allows customers to do a daily fantasy contest, again for cash.
Fans appreciate this because there is no season-long commitment, just the one-day game. DraftKings also uses statistics from the NBA, the NFL, and Major League Baseball.
With this acquisition, DraftKings' net worth is now $900 million dollars. Now, DraftKings plans to invest heavily in the ESPN family of networks.
Fan Duel counts NBC and the NBA as investors, along with Comcast.
This deal also gives DraftKings a step up on their main rival, Fan Duel, which is backed by the Comcast Corporation. While both websites account for 90 percent of the fantasy sports gaming, the new DraftKings deal puts them a foot up and gives them the opportunity to lead the industry. The biggest plus is that since DraftKings allows customers to play and win cash, and there are no banners or ads on the site.
Disney has already delved into the digital media market, buying Maker Studios, a former network partner with Google's YouTube. Disney has also purchased Lucasfilms and Marvel. All of these investments have done well for Disney.
According to Business Financial News, Disney now owns a 27 percent stake in DraftKings. However, one possible issue is that many people consider what DraftKings does a form of gambling. But now that Disney owns DraftKings, they will now get preferred ad space over Fan Duel on ESPN, giving them superior position for the future. That, combined with the pledge from DraftKings that they would spend $500 million in digital and television platforms in the coming years, means that Fan Duel will have to find other avenues of advertising.
DraftKings has continued to be successful in gaining investment revenue. Before the Disney money, DraftKings raised $70 million from the Raine Group, Redpoint Ventures, GGV Capital, and Atlas Venture.
DraftKings also announced they had entered an agreement with Major League Baseball to host fantasy baseball on their website. The website also announced that they have entered a sponsorship agreement, this one with the New England Patriots.
Last year, DraftKings moved up to one million subscribers. They also collected $304 million in games fees, as opposed to $45 million in 2013, and paid out $1 billion in contest winnings. DraftKings reported a revenue of $30 million in 2014.
[Image courtesy of the Informer.com]