Porn Giant Vivid Wants to Rescue Daily Fantasy Sports

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  • 'Fantasy sports and naked girls have a lot in common.'
  • DraftDay will provide platform, Vivid will provide an audience

As one of the world’s largest adult film companies, Vivid Entertainment has spent 31 years selling sexual imagery for all types and tastes. Now it’s focusing on a different kind of fantasy.

Next week, Vivid will debut daily fantasy sports games, in which customers assemble a roster based on actual players and win or lose based on how those athletes perform in real life. Called Vivid Sports 4 Money, the site will be built and operated by DraftDay Gaming Group. The companies will share profits. 

This is a natural extension for Vivid, said company co-founder and part-owner Bill Asher. In the early days of the Internet, pornography found a massive new market online -- and attracted the interest of regulators. But Asher and others figured out how to navigate new regulations and keep their millions of users. Now he’s eager to apply those lessons to fantasy sports, which is facing its own regulatory shake-out, and turn Vivid’s customers into players in the process. "Fantasy sports and naked girls have a lot in common," he said. "They’re very popular with a certain segment."

For closely held Vivid, offering daily fantasy sports is another way to make money off an already enormous audience. Asher declined to give traffic numbers, but they’re big. Market researcher IBISWorld estimates Vivid’s annual U.S. revenue to be around $100 million, giving it about 3.1 percent of a $3.3 billion market.

For DraftDay, teaming up with a company perhaps best known for celebrity sex tapes creates a competitive advantage: it only costs about $50 in marketing and advertising to draw a customer to a porn site, far less than it does to attract him to pure-play fantasy sports. It’s one of the main reasons DraftDay moved from promoting its own fantasy sports site to developing white- or private-label daily fantasy sites for other brands.

"The business model of classic daily fantasy is unsustainable -- the cost of user acquisition is just astronomical," DraftDay President Nic Sulsky said. Those costs have been well-documented by now: The 2015 ad blitz by top sites DraftKings and FanDuel cost well more than $200 million, according to CNN. 

The relentless advertising provoked attorneys general in several states and triggered a national debate about whether the games constitute gambling, and if so, how to regulate them. A handful of states, including New York, have tried to shut down the games entirely. 

Both Vivid and DraftDay, which is part-owned by gaming technology company Sportech Plc, are comfortable operating in a regulated and occasionally controversial industry. Most people in the daily fantasy industry expect regulation to come quickly; when it does, Vivid and DraftDay say they’re ready. 

Online pornography went through its own reckoning 15 years ago, Asher said. In the early days of the Internet, customers couldn’t get enough explicit videos. There was no need to advertise, and companies made money hand over fist. As the market grew, legislators and regulators took notice, and business got a lot more complicated.

With a big audience and an established brand, Vivid responded by striking white-label deals with companies that provided services it didn’t. Vivid was able to offer more products under its own logo. Smaller specialized companies handled the back end. Today, one-third of its business comes from white-label products. Its two webcam sites, for examples, are run by StreamMate and FlirtForFree. EffexMedia operates its e-commerce shop.

Asher has long thought white label products could help daily fantasy sports companies. He said he began been trying to convince DraftKings, FanDuel and other operators -- including DraftDay -- back in 2014. DraftDay, under previous ownership at the time, was the first to bite. Based in New York, the group was sold to Sportech and marketing firm Viggle Inc. in October. It has since started developing boilerplate fantasy platforms for partners including Batavia Downs and Seneca Resorts & Casinos.

The finer points of Vivid’s fantasy offering will change in the months after next week’s launch. Asher says he’ll test different graphics, price-points, sports, language and advertisements to find what’s most effective, which is how he promotes porn.

Does that mean users will get access to celebrity sex tapes if they sign up for fantasy sports? "We’ll test that out," Asher said.

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