Posted on: May 14, 2021, 12:39h.
Last updated on: May 14, 2021, 12:39h.
For now, DraftKings (NASDAQ:DKNG) is primarily viewed as an online sports betting company, but it’s made its plans to be an omni-channel, vertically integrated enterprise clear and that could eventually include a streaming entertainment acquisition, according to one analyst.
In a recent note to clients, Oppenheimer internet analyst Jed Kelly said DraftKings has ambitions that lie beyond online sports wagering and those include a possible metamorphosis into a broader sports entertainment outfit with multiple revenue sources.
We see DKNG making a larger push into streaming, where they can put the sports book experience into users’ homes and integrate sports analytics content,” said the analyst.
The Boston-based company is making clear its intent to be a player in the media landscape. Last month, it signed a $50 million deal with Meadowlark Media, the owner of Dan Le Batard’s network of shows. Prior to that, it acquired Vegas Sports Information Network (VSiN) and hired former Verizon executive Brian Angiolet to run its media arm.
DraftKings, Streaming Practical Idea
DraftKings recently launched a channel on the SLING TV streaming service after notching a similar accord with DISH Network so its potential over-the-top (OTT) ambitions aren’t far flung.
Plus, the virtual multichannel video programming distributors business (vMVPD) industry provides the added allure of revenue stream diversification. Currently, online sports wagering, internet casinos and daily fantasy sports (DFS) are the primary drivers of DraftKings’ top line
However, the first two are heavily dependent on political and regulatory outcomes. Once beloved, DraftKings stock has recently been pounded, shedding 30.38 percent for the month ending May 13 as investors speculate the company faces difficulty entering the New York market and may not be able to get into Florida if sports betting is permitted in that state.
Compounding those woes, gaming legislation recently died in Texas. Those scenarios may confirm DraftKings’ desire to push further into entertainment.
With a streaming deal, the company could “create two or three additional revenue streams they currently don’t have with an engaged user base,” said Kelly.
The Oppenheimer analyst doesn’t mention specific streaming candidates DraftKings could purchase, but he does note heavy costs are involved in either buying a dedicated OTT sports provider or building one from the ground up.
With sportsbook ambitions of its own and possible synergies with DraftKings in the nascent, but opportunity-laden in-game betting market, fuboTV (NYSE:FUBO) could make for a logical target for the suitor, but that’s just speculation at this point.
What is clear is that with $3 billion in cash and an fast-growing reputation for making deals, it wouldn’t be surprising to see DraftKings enter the streaming space at some point. It’s a matter of how that entry occurs and how much the gaming company has to dole out to make it happen.