The Indian online gaming sector is undergoing significant transformation, with KPMG forecasting a 21% CAGR in the market between FY21 and FY25, expected to reach Rs 29,000 crore by June 2021. India’s fantasy sports and gaming industry is projected to reach $3.7 billion by 2024, growing at a CAGR of 32%, while the mobile gaming sector is advancing at a 35% CAGR, currently valued at $6.5 billion.
According to a 2019 report by Flurry Analytics, India is among the top five countries globally for online and mobile gaming. Dream11 targets sports enthusiasts aged 20 to 35, with the majority of transactions occurring within this age group. The future of fantasy sports in India appears promising, offering substantial room for growth and innovation with the entry of new players.
About Dream11
Dream11, a prominent sports gaming application, allows users to create fantasy sports teams and earn cash rewards based on the real-world performance of selected players. Users can participate in a range of sports categories, including cricket, football, kabaddi, and the National Basketball Association (NBA).
In 2020, Dream11, a subsidiary of Dream Sports, achieved a significant milestone by registering 100 million users, a number that surged to 140 million in 2021, indicating substantial growth. This platform, which initially had only 2 million users in 2016, capitalizes on the passion and sports knowledge of enthusiasts, boasting over 150 million users presently.
Dream Sports, the parent company of Dream11, is a sports technology firm with a diverse portfolio that includes brands like FanCode, DreamX, DreamSetGo, and Dream Pay. Established in 2008 by Harsh Jain and Bhavit Sheth, the company is committed to making sports more engaging for fans through fantasy sports, content, commerce, experiences, and events.
Notably, it has garnered recognition as a great workplace and an innovative company in India and boasts investments from notable entities such as Kalaari Capital, Think Investments, Multiples Equity, Tencent, and Steadview Capital.
The inception
Childhood sports enthusiasts Harsh Jain and Bhavit Sheth co-founded Dream11, India’s leading fantasy sports application. The catalyst for this industry was the Indian Premier League (IPL), given the country’s massive cricket fan base. Harsh, after his education at the University of Pennsylvania and Columbia Business School, returned to India with the idea that fantasy sports leagues held a promising business opportunity. Despite initial skepticism, Bhavit Sheth, Harsh’s college classmate, joined the venture.
In 2012, Dream11 launched its first freemium service, marking the beginning of its journey. They also began seeking investors to support their growing venture.
The business model
Dream11’s business model centers on hosting fantasy games rather than relying on third-party advertising. While they initially experimented with Google AdSense, they shifted away from this approach to ensure a streamlined user experience. Notably, only 10% of Dream11 users participate in paid contests, making the conversion from free to paying users challenging and costly.
Dream11 offers a range of gaming methods, including freemium, premium, and private, allowing fantasy sports players to earn money. They charge a fee of over 20% of the total earnings in both grand and small leagues. Despite competitors with lower commissions and even free private contests, Dream11 remains a popular choice due to its customizable contest options, allowing users to create their own teams. Even in these scenarios, Dream11 earns a minimum of 20% in fees, ensuring revenue generation while users enjoy their games.
Challenges faced
Becoming India’s top online gaming platform was not without its share of challenges. One of the initial hurdles was navigating the legal landscape, as fantasy gaming bore some resemblance to gambling, largely prohibited in India. This led to legal disputes, but the judiciary ultimately recognized fantasy gaming as a skill-based activity rather than a game of chance, a pivotal ruling for the industry, which is presently in a self-regulatory phase.
Dream11 commenced its fantasy sports business with limited capital, initially relying on a modest investment of a few thousand dollars. To sustain and expand, they attracted a series of angel investors. Running the company required substantial funds, but their negotiation skills secured much-needed investments, bringing them close to their financial goals.
The challenges faced by Dream11 included overcoming legal obstacles, identifying a target market, effective marketing, securing an office location, and implementing the right technological solutions.
Investors till now
As of November 25, 2021, Dream11, India’s leading fantasy sports platform, had secured approximately $1.62 billion in funding through nine rounds. In the most recent funding round, which raised $840 million, key investors included Falcon Edge, DST Global, D1 Capital, Tiger Global, and Redbird Capital, along with participation from TPG and Footpath Ventures. The company achieved unicorn status in April 2019 with an investment from Steadview Capital and is supported by notable firms like Kalaari Capital, Tencent, Think Investments, and Multiples Equity.
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