Vivid Entertainment tries fantasy sports

February 22, 2016 2:25 PM
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Vivid Entertainment tries fantasy sportsAs 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.

This week, Vivid will debut daily fantasy sports games, allowing customers to 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.

Daily fantasy sports operators cannot do business in Nevada without a gaming license and there seems to be little interest in applying because of the state’s relatively small population. The situation is subject to change at any time. Regulations to legalize it are being considered in California, the center of the adult film, industry

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 told Bloomberg News. “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.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: PhilHevener@GamingToday.com.