Disney’s latest investment – $250 million on a start-up DraftKings

By | April 6, 2015
Disney invests in Draftsking

In recent days, very many companies are interested in expanding their company into digital media marketing for the potential and opportunities it brings along. One of the latest company with the interest is Walt Disney.

Disney invests in Draftsking

Disney has announced its investment of $250 million into DraftKings, an online fantasy sports start-up website which is now valued $900 after the investment. Founded in 2011 the Massachusetts-based start-up allows it clients to use real money to take part in fantasy sports and participate in daily fantasy contest.

The investment creates a huge opportunity for online sports business which is upcoming with lot of start-ups, many investments and a rush of customers as hobbies go social and mobile. Fans enjoy this because there is not commitment limited to seasons, just the one-day game. DraftKings also uses statistics from the NBA, the NFL and Major League Baseball.

The deal has increased the value of the company to $900 million which means Disney would own roughly 27% of the company. With the new investment, DraftKings and Disney plans to build and work on the ESPN family of networks. DraftKings has plenty of rivals, including FanDuel, which is backed in part by Comcast. Around $500 million is expected to pour into ESPN’s advertising platforms in the next years. DraftKings will get premium position on ESPN whereas FanDual can continue to advertise there, but it will not have priority.

DraftKings and FanDual have spent a lot on user acquisition. The Raine Group, Redpoint Ventures, GGV Capital and Atlas Ventures are the previous investors of DraftKings. NBC, NBA along with Comcast are the investors of FanDual. While both the websites account for 90% of the fantasy sports gaming, the new DraftKings has an edge over FanDual, as it allows customers to play and win cash and there is not advertisements on this site.

One possible issue is that many consider what DraftKings does is a form of gambling. DraftKings replied that its business is a game of skill, and so it is legal under U.S laws and Canadian laws. But its critics say is otherwise as the line between is blurred.

In 2014, DraftKings has increased its subscribers to one million. Their collection as game fees increased from $45 million in 2013 to $304 million in 2014 and paid out $1 billion in contest winnings. Its revenue was reported to be $30 million in 2014.