From the top: Media brands taking back control
After Musburger Media bought VSiN back from DraftKings – in the same light as Barstool’s split from Penn Entertainment – one industry lesson became very clear, Tim Poole writes in our latest From The Top column.
Affiliate and media brands make more money independently than they do when owned by a single operator. It sounds so obvious – yet it took some high-profile deals for the gaming industry to figure this out.
This is not a criticism; it is an observation. Given the amount of emphasis the sports betting sector is currently placing on convergence – ESPN Bet’s big-money deal with Penn Entertainment leads the way, while LiveScore Group is following a similar route away from the US – it made sense for operators to explore owning as much of their own content as possible. FanDuel still runs FanDuel TV, and seemingly without any problems. Elsewhere, though, there is now a growing list of examples one could point to that suggest an operator-media combination is not the ideal outcome.
Kresimir Spajic, Betfred US CEO, speaks to me about this as part of his CEO Special interview later in this issue. He believes sports betting media convergence is not working out as the industry had first hoped. And he is not alone in sharing this opinion. While Penn is trying again with ESPN, its original deal with Barstool Sports went down in history for all the wrong reasons. Having spent $551m in total to acquire the sports media brand, Penn famously sold it back to Founder Dave Portnoy for just $1 last year – creating plenty of doubters when it comes to the effectiveness of this type of deal.
But what has happened since for Barstool? Immediately, it was able to sign a major affiliate deal with DraftKings – and it is now free to work with any and all operators, not just one. Let’s face it – that is a far better proposition for any affiliate or media brand, no matter how many resources an operator might back them with post-acquisition.
The VSiN lesson
What’s really worth noting, however, is that DraftKings proves this lesson the other way around, too. While the brand became Barstool’s born-again hero after its Penn split, DraftKings proved to be the exact opposite for VSiN, the Sports Betting Network, the brand it bought in March 2021 but sold back to original founder Musburger Media this July. All appears amicable between DraftKings and the sports betting media network, as Co-Founder Brian Musburger told me exclusively on the Huddle once the deal was announced. And yet he was very honest in saying a media company simply functions better when it is independent.
VSiN is quite a unique company within the gaming space. It offers a traditional form of media in that it runs a 24/7 stream – and it’s all about sports betting. Over the years, it has developed a reputation as a source of education for bettors, but also as a hub of discussion for the more informed players. In other words, bettors who know the difference between a money line and a spread and are looking for bets with an edge – perhaps even a positive expected value.
Crucially, after its buy-back, VSiN can still work with DraftKings. But it can work with everyone else, too. Another point it is important not to understate is that independent content is better received by readers. So, it becomes a case of better-quality content. If one network ruthlessly promotes a single brand, it isn’t really giving viewers the full picture – and they will ultimately recognize this and fall away. As stated, VSiN caters to sharp bettors as well as newcomers to the game. DraftKings, by contrast, has a lot more interest in the casual bettor.
Considering that formula, a split becomes in the best interests of both the affiliate or media brand and the operator. Why should an operator continue to plough resources into a content division that would give it better results as an independent, external partner?
No harm in trying
As I said at the start, the theory behind this sounds obvious. But that’s hindsight. DraftKings, in particular, certainly shouldn’t regret this somewhat failed experiment. It learned a valuable lesson, showing the rest of us the evidence along the way. There is, naturally, more on the line for Penn – as it has doubled down on this same formula of conjoining betting and the media. The results here will determine a huge amount, and ultimate failure will probably put the nail in the coffin of any high-scale cooperation between a sportsbook and a media channel.
Yet, for now, even though we’re well past the Fourth of July, gaming can celebrate its own version of Independence Day. At Gaming America, it gives our beliefs a little vindication, too. We feel independent and objective analysis attracts readership – and business leads – far better than shouting about one particular brand or product. Demonstrating expertise is the single best way of showing your customers they need you. In sports betting, the VSiN example looks like a rather concrete example of this.
Of course, that is not to totally dismiss the idea of convergence. The consumption of sports as a whole is transforming, particularly in the US as fans stick by their preferred individual athletes regardless of what team they play for (and consume content mainly via highlights packages and social media engagement). Where betting falls into this picture remains a question mark, and we are seeing a number of different firms try to answer this question with varying methodologies.
Operators benefit from media independence too
What we can conclude, however, is that buying media brands that are famous for a certain independence and cutting-edge style doesn’t work for operators. This may be a devil-may-care attitude (Barstool), or a dedication to objectivity and serving the educated bettor (VSiN). In this equation, the media brand starts to produce a lower quality of content, generating a lower level of turnover, thus making it a poorer investment for the operator. As independent outlets, Barstool and VSiN can do far more – and thereby result in far more traffic to the likes of Penn and DraftKings. In short, taking a smaller share of a larger pie is going to make more than a 100% share of a tiny pie.
It’s been genuinely refreshing to see media brands take back ownership of their content, even if it’s not something every single media brand will end up doing. And it’s good to see gaming operators acknowledge that they don’t have to do everything themselves, too. At the end of the day, affiliates stay independent for a reason. If IMDB only ever told you to watch Ryan Reynolds films, movie-goers would quickly lose interest in IMDB as a credible source. If that same site told you Deadpool & Wolverine is an 8.5/10 worth watching, but that Inside Out 2 is still #1 in the 2024 Worldwide Box Office, you might decide to go and watch both movies.
Perhaps the most important part of this whole equation is that the consumer gets to decide. Because a bettor bombarded with one-sided branding will not be a bettor who truly wants to play with said firm. Presented with all the available information, the bettor that chooses to play with a sportsbook becomes a far more valuable customer – and, with the fine margins and high acquisition costs at play in the US, this can make all the difference.
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